Since the Affordable Care Act was signed into law, we’ve seen a number of provisions eliminated – rules and new programs that we knew all along simply wouldn’t work. Among these include the CLASS Act (the government-run long-term care insurance plan that was scheduled to go into effect in 2012), the 1099 provison (a requirement that employers issue 1099s to any corporate vendor they pay more than $600), and the voucher program (which would permit employees to bail on the employer plan, use the contribution to purchase lower-priced individual coverage, and pocket the difference).
Well now another one’s gone – the ridiculous $2,000 deductible limit in the small group market. Nobody every really understood why this rule was enacted in the first place. It’s not required in the individual market or in the large group market, just small group. And it really didn’t make sense since the average deductible in the small group market is already over $2,000.
But, thankfully, this requirement has been eliminated. Last week, President Obama signed the one-year Sustainable Growth Formula patch, and included in this law was a repeal of the small group deductible cap of $2,000 for single coverage and $4,000 for family coverage. As Jessica Waltman explains in the April 4th edition of NAHU’s Washington Update, most insurance companies have now “been granted waivers for the small deductible cap,” giving employers “the flexibility to offer high-deductible plans in the small group market without concerns that these policies will be restricted or eliminated in the future.”
While this is a positive step that will certainly be welcomed by small employers and insurance agents, other problems remain, namely the modified adjusted community rating rules, which will result in significant premium increases for tens of thousands of small employers on their 2014 renewal date, and the fact that a company that offers health insurance blocks most of its employees and their family members from receiving a premium tax credit in the individual marketplace.
Unfortunately, neither of these problems is likely to go away anytime soon, and that means that this latest tweak to the law, while necessary, will do little to stop small employers from ditching their group health coverage. And agents who have the tools to help employers with this decision along with a solution for employers who choose to drop coverage will be well positioned to take advantage of the huge opportunity created by the health reform law.