What The Current Status Of The Affordable Care Act Means For You

IMPORTANT UPDATE

In recent weeks, Republican lawmakers in Congress proposed the American Health Care Act (AHCA) to replace the Affordable Care Act (ACA). The AHCA would’ve cut the federal deficit by $150 billion from 2017 to 2026, according to the Congressional Budget Office (CBO). Other major changes included:

  • Made it easier to deduct medical care costs from income taxes.
  • Sped up the repeal of taxes on insurers, hospitals, tanning beds, and high-income individuals by a year, because it helped fund the ACA.
  • Increased spending on Medicaid.
  • The CBO predicted that the AHCA would result in14 million people uninsured by 2018 and an additional 24 million uninsured by 2026.

However, due to lack of support, the AHCA was not brought to a vote and the bill was pulled. While there could be changes proposed at some point in the future, the ACA will stay intact for now. If any changes are made, it could bring massive transformations to organizations’ and individuals’ health plans across the country.

“The Affordable Care Act remains the law of the land for the time being,” said Pat Gagne, Aureon Vice President of Benefits. “At present all requirements to have health insurance and for employers to provide health insurance continue to be in force. How long that will continue is an unknown. It could be days, weeks, or even the next four years. Employers must continue to comply with all the pieces of the law for the foreseeable future.”

ORIGINAL POST: GRANDFATHERED AND GRANDMOTHERED PLANS

Most organizations already have their healthcare plans in place, and changing plans creates stress and questions. Others have ridden the waves of change ever since the passing of the ACA and are looking for the solid ground of a long-term, stable solution.

Then there are organizations that fall into both of those camps: the grandfathered and the grandmothered health plans. 

Grandfathered Plans

Group plans that were purchased on or before the signing of the ACA (March 23, 2010) were considered “grandfathered,” and were exempt from many changes required under the ACA if they didn’t make any significant changes that reduced benefits or increased costs to the members. There is no set end date for grandfathered plans.

Grandmothered Plans

Health plans that were in effect prior to 2014 are considered transitional, or “grandmothered.” These plans may not have all the ACA provisions, but they do have to comply with the following:

  • Preventive care with no cost-sharing.
  • No limits on essential health benefits.
  • Mental health parity.
  • Prohibitions on pre-existing limit exclusions.
  • Benefit waiting periods cannot exceed 90 days.

Originally, these grandmothered policies were required to be replaced with ACA-compliant plans as of January 1, 2014, or at the first renewal after that date, but after several deadline extensions from the Health and Human Services, the final issued dates allow grandmothered plans to continue to renew until October 1, 2017 with a termination date no later than December 31, 2017.

Why They Stay

Because ACA-compliant plans have been available since January 1, 2014, most small employers have priced compliant plans and have chosen to remain grandfathered or transitional (grandmothered) for a reason. For the majority, that reason was price. Most likely, those employers enjoyed lower renewal increases due to favorable claims, lower demographic loads (younger employees), or a mixture of both. Groups are also avoiding ACA-compliant plans for other reasons, such as community rating, the structure of group health premiums in ACA-compliant plans, which typically results in higher healthcare premiums in ACA-compliant plans.

WHAT’S AHEAD

"Faced with the final year of transitional relief, employers are looking for ways to avoid moving to ACA-compliant plans," says Gagne. "There are a few options, but carriers have been forced to think outside the box and find solutions for those small employers with good risk.”

"One option is self-funding,” says Gagne. “Carriers are allowing small employers with as few as five or 10 employees enrolled to enroll in a self-funded plan."

Unlike traditional self-funding, some plans offer a set monthly premium that covers fixed costs and claims in one neat payment. At the end of the year, employers may be able to share in the surplus if claims were lower than projected, but are not asked to pony-up if claims were higher than expected.

Because self-funded plans are subject to different rules, carriers are allowed to underwrite the risk of a group using health statements and claims experience. ACA-compliant plans don’t allow this. The negative side of self-funding is the risk of having a bad year, and the smaller the employer, the bigger the impact one large claim could have. The resulting high renewal could very well drive the employer to the very ACA-compliant plans he or she was hoping to avoid.

So what other option is there? Many turn to outsourcing their health plan, which alleviates the burden of having to worry about every single deadline and the constant change. The outsourcing company handles everything, and gives organizations a fixed cost, usually per employee. This also allows organizations to focus on other areas and maximize their time and resources.

"Whether the ACA is erased from existence, revamped, or left untouched remains to be seen, but one thing is for sure: change is constant, and the better prepared organizations are for it, the better," says Gagne.

Do you have a plan in place for next year?

How regulations affect your business

 

Dominic Senese

Dominic Senese is a Director of Business Development at Aureon HR, where he's been a part of the Kansas City team since 2015. Dominic adds a unique background to our team as his accolades include; being a 2-sport athlete (Football and Baseball) while earning a Bachelor's of Science in Business Management from North Park University (Chicago, Illinois), then earning his Master's Degree in Psychology from Lewis University (Romeoville, Illinois) as he served as a School Counselor and athletic coach for many years before joining the Aureon HR team. Dominic also holds his Life and Health Insurance Licenses as he owned his own insurance company for many years in the Kansas City area. With 15 years of professional experiences, he has been able to show client how to; decrease cost(s), decrease a company's liability, decrease the time spent on transactional HR, increase employee production, and ultimately increase profitability.

Published

April 10, 2017

Posted by

Dominic Senese

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