Local insurance agents presented information and took questions on the Affordable Care Act (ACA) and its impact on small businesses at the Eggs & Issues forum sponsored by the Lake West Chamber of Commerce Tuesday morning at Cannon Smoked Saloon in Sunrise Beach.
Tami Brown of Mills & Son Insurance and Jeff Moffitt of The Dearborn Agency discussed "Obamacare" with area business people who had concerns about changing regulations.
A certified ACA presenter, Brown warned that many things were still up in the air with so much now in flux due to difficulties during the roll-out of the program and healthcare.gov website.
According to Brown, the new rates for 2014 that were supposed to be out in October will hopefully be out by Jan. 1. Many insurance companies are now offering to renew policies due in July because they can only guarantee the current rates for another six months, she said.
As the new rates do come out, Brown told the crowd to expect significant increases in premiums, citing a jump of 40 percent.
She attributed this in part to the changing structure of policies based on factors of new coverage requirements.
Previously when a small business sought to offer coverage to employees, information on gender, ages and health status was collected and a plan built around those factors and what the employer and employees could afford.
While everyone can get coverage now, the catch has been affordability. The only recourse for those who couldn't qualify medically for regular insurance was to join an expensive health pool.
With the ACA, medical conditions cannot be a factor, though tobacco use is.
ACA-compliant policies must also provide certain "essential" benefits — most of which are available in current policies. However, instead of being options for coverage, they are required.
According to healthcare.gov, essential health benefits must include items and services within at least the following 10 categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.
Gender can no longer be a factor in coverage, and one of the differences is that maternity coverage is an essential benefit under the ACA, requiring men to also have the coverage. That may stabilize rates for women but will significantly raise costs for men, Brown said.
Age was and is a factor in premium costs, but how it is used is changing. Currently, age categories based on five year spans are used in calculations. With the ACA, it will affect the premium every year, Brown said.
Page 2 of 3 - Overall, the ACA looks to be leading to policies being less tailored to the needs of the individual or small group, she said.
With premiums looking to be on the rise as well as other factors, more small businesses may stop offering employee health insurance to full time employees, according to Brown.
According to Brown, the ACA puts full time equivalent status at a threshold of 30 hours a week, but the definition is "fluid" right now with the business requirement portion of the law delayed until 2015.
With affordability the key concern of the law, employees' portion of their health insurance cost must not exceed 9.5 percent of their income in order for the plan to qualify as affordable under the ACA.
While that seems helpful for employees, it could also become another factor — in addition to less tailored coverage — that limits the flexibility of small business employers and employees to work out a plan together, Brown said.
"Subsidies" in the form of premium tax credits could also impact whether small businesses choose to continue offering health insurance to employees, she said.
The penalty for big businesses — defined as 50 employees or more — to not offer healthcare benefits has been delayed until 2015, but there is no penalty to small businesses for not offering health insurance.
If a small business does not offer employee health insurance, these workers could qualify for the new tax credit to buy insurance on their own depending on their household income.
The amount of savings through this option depends on family size and family income. The lower an income is within ranges set by the ACA, the more is saved.
For an individual, the range to receive the credit is $11,490-$45,960. For a family of four, the range is $23,550-$94,200 for four. More information on these ranges is available at healthcare.gov.
If a person's or family's income falls below the amounts set by the ACA, the household may qualify for coverage under a state's Medicaid program. But with Missouri not expanding Medicaid in 2014, those in the range between the current Medicaid system and the ACA can't get lower costs through the Marketplace coverage based on their income.
For those who are eligible, advance payments of the tax credit, up to a maximum amount, can be applied directly to the monthly premium. If the amount of advance credit payments an individual gets for the year is less than the tax credit they're due, they get the difference as a refundable credit when they file their federal income tax return.
As long as the coverage offered is considered "affordable" — 9.5 percent of income or less — and meets "minimum value" standards, paying at least 60 percent of the total cost of medical services for a standard population, employees offered coverage will not be eligible for this savings on their monthly premiums if they buy through the marketplace, according to healthcare.gov.
Page 3 of 3 - As a result of these factors, Brown predicted that many small employers will opt to cancel benefits, possibly offering less costly wage or salary increases to offset the loss in benefits to some extent. The employee could then get a plan on their own through the Marketplace. Another option would be to cancel more expensive spousal or family coverage for similar reasons.
Small businesses — those with 25 full time equivalent employees or less who are making an average of $50,000 a year or less — may qualify for a tax credit if they pay at least 50 percent of full time employees' premium costs. The tax credit is worth up to 50 percent of an employer's contribution, but the credit is only available if the employer gets the coverage through the Small Business Health Options Program (SHOP) Marketplace, according to healthcare.gov.
Similar to individual insurance policies, the SHOP Marketplace offers four levels of plans — bronze, silver, gold and platinum — which do not vary in the "essential" health benefits but in what employees can expect to pay for deductibles, copayments and maximum out-of-pocket costs.