The Patient Protection and Affordable Care Act was passed on March 23, 2010 with the intent of improving the U.S. health care system. The legislation was primarily focused on bringing coverage to the uninsured and decreasing health care costs through changes implemented over the next several years. The law places certain legal obligations on individuals and employers as it relates to obtaining health insurance.
Companies employing fewer than 50 full-time or full-time equivalent employees are exempt from the Pay or Play Mandate. The Pay or Play mandate is the law which states that companies employing 50 or more full-time workers must provide health insurance for their employees and will be penalized with fees if they fail to do so.
Changes for Companies Employing Fewer than 50 Full Time Workers
All companies who sponsor a group health plan and have an employee count under 50 will be subject to community rates. Group plans for fewer than 50 employees will no longer have a tiered rating system of employee only, employee plus spouse, employee plus children or employee plus family, but instead will have different rates for each age of an employee. The rating system will have a 3:1 premium difference for all ages, meaning that the youngest employee will only be 3 times less expensive than the oldest employee of the group. Carriers are now permitted to add surcharge to the premium for employees who are tobacco users. Many carriers are choosing not to implement a tobacco surcharge right away; however they could start using it in the future. However, carriers are no longer allowed to charge different rates due to gender or pre-existing medical conditions. Deductible limits and out-of-pocket costs are also capped at a certain dollar amount. The addition of Essential Health Benefits and new taxes and insurance fees being added to the premium bill will also have an impact financially.
Will My Company Have to Change Policies?
If your company offers health insurance which does not cover the Essential Health Benefits as mandated by ACA and/or does not pay at least 60% of covered health care expenses, you will have to change policies. Essential Health Benefits are:
- Ambulatory patient services, such as doctor’s visits and outpatient services
- Emergency services
- 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
- Pediatric services, including oral and vision care
Many group plans already include a majority of these benefits, with the exception being the pediatric oral and vision care and these additions are expected to increase rates in the marketplace. Individual health insurance does not currently cover maternity coverage and this required addition will see increased costs for those policy holders.
If you have questions about purchasing health insurance for your group of fewer than 50 employees, please call Healthcare Consultants at 713-626-2838 or use our Contact Form.