TONY WILSON: Examine health care options closely before renewal

Tony Wilson

Tony Wilson

Help for small employers offering group health plans is on the way. Well, maybe.

The Affordable Care Act required, beginning with renewals in 2014, that small employers — those with fewer than 50 full-time equivalent employees — offer plans with deductible caps of $2,000 for an individual and $4,000 for a family.

The law also required that those small group health plans provide coverage at least at the bronze level, which means plans must cover on average 60 percent of the expenses incurred by an enrolled member.

On April 1 the president signed into law the Protecting Access to Medicare Act of 2014, which changed these requirements completely. The main goal of the law, referred to as a “doc fix,” was to provide a 12-month delay of a reduction in payment rates for providers who participate in Medicare.

But the law provided another “fix” — the repeal of the deductible requirement for small group plans retroactively to March 23, 2010, the date of the ACA enactment.

Because of the requirement to move deductibles to $2,000 or less we have seen significant increases in health plan costs. Typically when you lower your deductible you see a cost increase. One of the ACA’s stated intentions was to make coverage more affordable, but we are not seeing that in the small group market.

I have long been an advocate of high deductible plans, and for years we have worked to educate clients and their employees on the benefits of high deductible plans — when used in the right scenario.

Some simply assume an employer offers a high deductible plan to save premium. While that is a benefit, it certainly isn’t the only option employers and employees should consider.

The properly designed high deductible plan — one with reasonable office visit and prescription copays — is a viable option for employers desirous of offering a quality plan of benefits to his or her employees. It also provides a cost-saving measure for employees and their families if they are contributing any portion of the monthly premium.

Many employers we worked with offer high deductible health plans and couple those with Health Reimbursement Arrangements (HRAs) where the employers reimburse employees who meet a portion of or all of their deductible. Employers fund the reimbursements from the premium savings they realize by moving to a higher deductible plan.

While many who have health insurance coverage do not use the coverage in an average year, there are many who do. The majority of our clients’ employees and family members who do use the coverage only use it for an office visit or a prescription. Few actually meet their deductible.

I conducted a study some time back with our medical carriers and learned that regardless of the deductible only about one-third of the covered members actually met their deductible. I posed the question to clients and employees alike — why pay for a lower deductible if you are not going to use or need it?

Employers and employees alike realized some relief in 2013 when the Administration allowed carriers to offer plans with deductibles above the $2,000/$4,000 mark if the carrier could not reasonably offer plans at the bronze level including the required deductible maximums.

While the Medicare Act of 2014 seems to make it as if the deductible limit of the ACA never existed — it did. And it is not so easily repealed in the insurance market.

Much like when the president announced people could keep their canceled plans, this repeal poses many of the same issues, especially the fact that for the past four years carriers have been gearing up for the $2,000/$4,000 requirement. This is not a ship easily turned.

Carriers already have filed their 2014 plans and are working on 2015 plan filings. These filings do not include the plans they were forced to cancel because those plans did not meet the requirements of the ACA. Carriers must follow a process, and it is not one than can be changed simply with a pen and a phone.

This will continue to unfold as we move into 2014.

As you look to your renewal for this year or even moving into 2015, I strongly recommend you work with your broker or the carrier to find out what health plan options are available in order to offer the benefit option that best suits your needs and those of your employees and their families.

Questions or comments? Feel free to email me at twilson@nfp.com.

Tony L. Wilson is a partner with NUVISION Financial Corporation based in Conyers. NUVISION is a subsidiary of National Financial Partners Corp., which provides benefits solutions for companies.