Experts weigh in on Affordable Care Act
The federal Affordable Care Act, which went into effect in 2010 with the aim of both reforming the health care system and making insurance affordable to everyone, may be far from perfect and remains controversial. But small to large companies in Maine, as well as insurance brokers, lawyers and other stakeholders, are preparing for the onset of open enrollment in the Health Insurance Marketplace, which starts Oct. 1 and runs six months.
“October is right around the corner. A lot of people don’t realize the ACA is out there and is going to affect them. In 2014, people will see a major change,” said Eric Cioppa, superintendent of the Maine Bureau of Insurance. Jan. 1, 2014 is when the new health exchange plans go into effect.
“I think the ACA will change behavior in ways people don’t understand,” he added. For example, while it’s typically large employers now who would encourage workers to get individual insurance, Cioppa and others expect small employers to start doing the same, because they might quality for a subsidy on the health exchange.
Cioppa told the 200 attendees at the Mainebiz Health Care Reform Forum, held yesterday in Portland, that he thinks health care is expensive and will continue to be expensive.
“The ACA in my opinion did not do enough to contain health care costs,” he said. Some 42% of the market in Maine is in the private sector. The rest is paid for by the government in programs like Medicare, Medicaid and the military. Maine’s health care costs are the fourth-highest in the country on a per capita basis, he said, quoting 2009 Centers for Medicare & Medicaid Services statistics.
Fifteen speakers offered their opinions of the ACA during the forum’s four sessions, which were broken up into a general session and three breakout sessions focused on the ACA’s impact on companies by number of employees. Cioppa was joined by representatives from Anthem Blue Cross and Blue Shield in Maine and Maine Community Health Options, the two expected providers on Maine’s health insurance exchange, and others.
Cioppa added that by 2018, the percent of gross domestic product going to health care will be 20% nationally, far greater than other industrialized countries. To some of the panelists, the ACA is a move toward correcting the high costs.
“There are many opportunities in the ACA. Is it perfect — no. It’s a great step forward to improving our health care system so we all can live healthier and longer lives,” said Dr. Dora Anne Mills, director of the School of Community and Population Health at the University of New England.
So how well prepared is Maine to start its health care exchange and implement the ACA? Cioppa expressed concern.
VIDEO: Hear what Cioppa and our three other panelists had to say about the ACA after Thursday's general session:
“We have from October to March 2014 for people without insurance to enroll in a health plan. But if they don’t, they are then precluded from getting insurance until the following year,” he said.
Cioppa also pointed to the great challenge of getting the information technology infrastructure in place to handle the communications among multiple groups participating in the ACA.
“It’s not that we lack the expertise in the state, but we lack the ability [of the different parties] to connect,” said Emily Cooke, an attorney with Pierce Atwood.
Harvard Pilgrim Health Care ran into that problem and decided to delay its participation on the health exchange a year, according to its legislative and regulatory consultant Patrick Cahill. “We will offer coverage on the exchange, but not in 2014,” he said, citing the communication technology issues. “We were concerned about getting it up and running in time.”
In the meantime, for the next five weeks Maine companies will be wrangling with how or whether to offer insurance under the ACA, whether to cover dependents of employees and other issues. But it is clear from discussions at the forum that they already are in taking action.
Microbusinesses
In the microbusiness session, which focused on companies with fewer than five employees, many attendees said they already offered health care coverage to their employees, but wondered whether there were better opportunities through the ACA marketplace’s individual or small group plans. Part of that interest was directed to the federal subsidy for individual plans and tax credits for small businesses.
Mitchell Stein, policy director for Consumers for Affordable Health Care, pointed out that for an individual in Maine making between $11,490 and $45,960 a year, or a family of four earning between $23,000 and $94,000, is eligible for help, based on a sliding scale. The subsidy is based on a percentage of the premium cost compared with income. For instance, if a person purchases an individual plan in the market that costs $100 per month but is capable of only paying $50 per month, the federal government will pick up the other $50 per month. Other subsidies are available based on out-of-pocket expenses.
Likewise, small businesses with fewer than 25 employees whose average salary is $50,000 or less could earn tax credits in 2013 for up to 35% of the company's contribution to the employee's premium. Beginning next year, if a small employer purchases coverage through the marketplace, the company is eligible for a tax credit of up to 50% on the company contribution. The tax credits are available on a sliding scale, with firms with fewer than 10 employees getting the maximum credit.
All the panelists emphasized that employers with fewer than 50 employees are under no obligation to offer health care coverage to their employees. But they do have to send notices to employees by Oct. 1 making them aware that they have individual responsibility to get coverage and information about the marketplace. Under the ACA individual mandate, which survived a constitutional challenge, nearly all Americans must have health insurance by 2014.
Of particular concern to microbusiness owners and managers is something Stein called “the family conundrum.” Under the ACA, if an employee has affordable and credible coverage through his company, which is also offered to his dependents, then the family is not eligible to go to the individual marketplace and get a subsidy. In some situations, small companies could elect not to offer family coverage as a work-around, and instead only offer coverage to employees, thus allowing the spouse and dependents to get coverage as individuals through the marketplace.
Small businesses
Similarly, many of the 80 or so people who attended the session for businesses with 5-49 employees already provide health insurance coverage to their employees, and they didn’t seem inclined to drop it, even though there is no penalty for doing so under the ACA for companies with fewer than 50 full-time employees.
Even so, panelist Edward Feibel, an Eaton Peabody lawyer, advised employers on the upper end of the spectrum to apply the ACA’s formulas related to part-time and seasonal workers to make sure their full-time-equivalent numbers are below the 50-employee threshold. Doing that math, he said, would help them avoid penalties they might otherwise incur.
Panelist Rick Dacri, owner of Dacri & Associates LLC, offered a caveat and followed it with a reassurance based on his experience with clients in Massachusetts, who now have seven years of experience with their state’s “pay or play” mandate and health exchange. The ACA is a complicated act and as more people learn more about it, he said, they will have more and more questions.
“Once we get into it, we’ll find that it’s manageable — [at least] that was the Massachusetts experience,” he said.
Kevin Lewis, chief executive officer of the Lewiston-based MCHO, and Kristine Ossenfort, director of government relations for Anthem, provided details about the health insurance plans they’ll be offering on Maine’s federally run marketplace for individuals and small businesses. Employers can find detailed side-by-side comparisons of their small group plans at the Maine Bureau of Insurance website.
Large businesses
Earlier this year, large companies were kicking into high gear to get ready for the employer mandate. But with it now set to take effect in 2015 instead of next year, they have eased off.
Roger Prince, a senior manager in the BerryDunn tax group, said his firm had clients ready to pay for compliance assessments of their insurance plans with regard to ACA reforms, and then the Obama Administration delayed the rollout of new requirements for large employers — those with over 50 full-time workers.
Still, with the additional preparation time, panelists speaking to a group of representatives from large companies said the delay leaves many questions about the actual implementation of the act, which employers should prepare for sooner rather than later.
For instance, Bucky Gahagan, a vice president and insurance broker with Willis Northern New England, recommended that employers that outsource human resources functions make sure their contractors are equipped to provide some of the complex workforce data that companies will be required to report as part of the ACA. Large companies face a range of business decisions in how to assess their work forces, using anywhere from three to 12 consecutive months of work force data from the previous year to determine their size under the law. Firms would be wise, Gahagan said, to find out if that data can be retrieved reliably long before the deadlines again loom and to take a look at their work forces by the same accounting the Internal Revenue Service will use in implementing the law.
Steve Gerlach, an attorney at the Portland firm Bernstein Shur, said some rules around employee designations, particularly for contracted workers, remain unclear under the law. Gerlach said the common-law definition of employer — a firm that has direct control over a person’s work product — is typically applied, but just who is responsible to provide insurance to a specific employee in a complex contracting situation can be difficult to tease out.
In advance of requirements that employers offer insurance that meets affordability and quality measures, the panelists also recommended that employers keep documentation of workers who declined the insurance for one reason or another. That proof of an offer of qualifying insurance could prevent costly penalties for not meeting that ACA requirement.
For more information please visit our links to additional resources on the ACA at www.mainebiz.biz/ACAresources.
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