It’s hard to believe another year is already in the books. 2013 flew by, and in a few days the 4th quarter will be over but a new type of chaos will start – the “full implementation” of health reform. Of course, with all of the delays, that full implementation isn’t what we thought it would be – many of the provisions that were scheduled to go into effect January 1st have been pushed back to 2015.
2013 has been an eventful year. Here are some of the highlights by market segment:
January 1st: With only a year to go until the employer mandate was scheduled to go into effect, companies with 50 or more employees kicked their planning into high gear, trying to figure out the best way to reduce their exposure to higher premiums or, even worse, non-tax-deductible penalties. Some employers said publicly that they would shift employees to part-time so they wouldn’t have to offer benefits, a possible violation of ERISA, while others explored the idea of “skinny plans” that exclude many of the essential benefits. And others considered dropping their coverage altogether.
January 2nd: The IRS issued proposed rules for the employer shared responsibility requirement and opened the comment period, which closed in March. We expected final rules by summertime, but we still haven’t received them. Until we do, the IRS says we can rely on the proposed rules for guidance.
July 3rd: Large employers were given a “stay of execution” when the administration announced, quite unexpectedly, that the employer mandate would be delayed until 2015. Now large employers really do have only a year to go, so the planning will start all over again.
February 27th: HHS issued the final market rules, answering some long-awaited questions about the benefits that must be offered in the small group market and the way insurance companies will price those plans. Of particular concern to small employers was the statement that “the law compels per-member rating,” causing some insurance companies to conclude that they could no longer composite rate. HHS also said that it would issue future guidance about how to count employees when determining whether a company is a small or large group. We’re still waiting…
April: The administration announced that the “employee choice” feature of the SHOP exchange would be delayed until 2015, stating that employers would still be allowed to choose the health insurance carrier and the health plan that would be available to their employees in 2014.
September: HHS announced that online enrollment in the SHOP exchange would be delayed until November.
September 13th: In a technical release from the DOL, we finally received some guidance about defined contribution. Small employers (as well as large employers) were hoping they would be able to dissolve their group health plan, put the money in an HRA instead, and let their employees use the employer contribution to buy plans in the individual market, some of them subsidized by the government. Unfortunately, the three departments make it clear that this is not permitted due to sections 2711 and 2713 of the Public Health Service Act, which say that group health plans must cover unlimited preventive care with no cost-sharing and must not place a limit on essential benefits. Fortunately, there are still ways for employers to offer a benefits package their employees will appreciate without blocking them from a subsidy.
November 27th: The administration announced that the SHOP exchange would be delayed until November, 2014 for 2015 enrollments. In the meantime, employers were advised to work with an insurance agent to get coverage in the small group market. What a great idea!
December 2nd: HHS provided some clarification on composite rating, saying that carriers must fact each employee and dependent’s rates separately based on their age and tobacco status, but nothing prevents insurance companies from developing a composite rate based on coverage type once the total group premium is determined. If they choose to do this, they will need to hold the rates until renewal time with no adjustments when the group composition changes.
February 1st: The Treasury Department issued the final rules on affordability for related individuals (dependents who are eligible to enroll in employer-sponsored coverage because of their relationship to the employee) when determining if they are eligible for a premium tax credit in the individual marketplace. Surprisingly, the IRS concluded that it was congressional intent to deny dependents access to the government subsidies if the employer plan is affordable for the employee. As long as the cost of single coverage (after the employer contribution) does not exceed 9.5% of the employee’s household income, the plan is considered affordable and the entire family is blocked from a subsidy.
In the same guidance, the IRS clarified that the affordability exemption from the individual mandate is based on the cost of family coverage, not single coverage. If the cost to cover the entire family on the employer plan exceeds 8% of the household income, which will often be the case, then the family is exempt from the individual shared responsibility penalty.
May 1st: HHS released guidance entitled Role of Agents, Brokers, and Web-brokers in Health Insurance Marketplaces. The document described the three options for brokers who want to assist their clients in applying for health insurance and a government subsidy: a marketplace pathway (through the Healthcare.gov website); an issuer-based pathway (through the carrier’s website); and a web-broker option (through a private exchange website). The guidance also made it clear that HHS would not set commission levels and that brokers would pay the same amount for plans sold on and off the exchange.
July 5th: Because some states that chose to develop their own exchange were having difficulty connecting to the IRS website for income verification purposes, HHS announced that those states could use the “honor system” when determining subsidy eligibility. This got a lot of media attention and infuriated opponents of the law, who claimed that this would lead to fraud and abuse. Later, in a deal between Harry Reid and Mitch McConnell to end the government shutdown, it was agreed that income verification would be required in all states when someone applies for a premium tax credit.
August 1st: Training for brokers who want to sell through the individual marketplace went live. The 4 to 6 hour self-paced training was created by CMS and conducted on the Medicare Learning Network website.
August 28th: A Kaiser Family Foundation tracking poll found 44% of Americans were unaware of the status of the health reform law. Most either thought the law had been repealed or overturned by the Supreme Court or weren’t sure if it was still the law.
October 1st: The Healthcare.gov marketplace and individual state exchanges went live, but there were a ton of technical problems, especially with the federal site. 6 people nationwide managed to enroll the first date. The state exchanges fared a little better, though some were unable to take any online applications. The site was barely functional during the month of October, and the media reports and late-night comedians weren’t kind to the administration, which promised to have the site fixed by the end of November.
November 14th: Bowing to political pressure, the administration announced that individuals receiving cancellation letters from their insurance companies will be allowed to renew their plans in 2014, but it’s still up to the state and the insurance company whether they want to do this. Most states that developed their own exchange decided not to adopt the President’s “fix”.
November 22nd: The administration gave Americans an additional 8 days to enroll in coverage for a January 1st effective date, moving the deadline from December 15th to December 23rd.
November 30th: As promised, the Healthcare.gov site was working much better, and enrollment surged, but the technical issues were not completely gone. The administration explained that the site will continue to be improved.
December 2nd: The administration announced that the open enrollment period next year will be November 15th, 2014 through January 15th, 2015. It was originally scheduled to overlap with the Medicare AEP – October 15th through December 7th.
December 12th: The administration announced that people who’ve tried to sign up for coverage by December 23rd but had technical issues with the website would qualify for a special enrollment period, giving them additional time to enroll. Individuals covered by the pre-existing condition insurance plan were also given an additional month to compare their options and sign up for coverage.
December 20th: The administration announced two new “fixes” for individuals losing their individual health coverage due to the Affordable Care Act: they will be eligible for a hardship exemption, eliminating any penalty they would pay under the individual mandate if they choose not to purchase coverage, and they will be able to purchase catastrophic plans, previously reserved for young adults under the age of 30.
December 23rd: The administration once again extended the enrollment deadline, giving consumers an additional 24 hours – until 11:59pm on Christmas Eve – to sign up for a January 1st effective date.
WE SAW IT COMING!
This recap wouldn’t be complete without us saying “we told you so!” At Health Partners America, we knew this thing was going to be a mess and have been writing, doing webinars, and speaking about it all year long. We predicted that, once employers understood how the subsidies actually work, they would seriously consider dropping their group health coverage and letting their employees purchase coverage in the individual market. And that’s exactly what’s happened.
And while HPA isn’t the only company to make these predictions, what separates us is that we’ve actually developed a solution that brokers can take to their clients – a private exchange coupled with a world-class call center. Hundreds of agents nationwide partnered with HPA in 2013, and they’re finding health reform to be a huge opportunity. If you haven’t yet set up your own private exchange, there’s still time to take advantage of the initial enrollment period, but the window is closing quickly. Please attend one of our webinars and consider signing up today.