Navigating Current Health Insurance Legislation
Health care is at the forefront in the current political landscape, and possible changes to the Affordable Care Act (ACA), also known as Obamacare, can feel overwhelming to small business owners. While there have been multiple attempts to overhaul the ACA as a whole, no new legislation has been passed. Despite these failures, President Donald Trump has taken several actions that will eventually impact health care as we know it. Though the possibility of changes may feel burdensome, it is important to note that no changes to Obamacare will make any impact until late 2018 or early 2019. Any health care decision business owners have made for 2018 will stand. However, over time, President Trump’s changes to Obamacare, unless hindered by an entirely new health care law, will begin to reshape the health insurance industry.
Here’s what small business owners need to know about what’s going on:
Health Insurance Associations
The executive order President Trump issued in October 2017 opens the door for an expansion of association health plans. Such arrangements already exist and are set up by small businesses, trade groups and other associations. Under Obamacare, the members of these associations were required to work within the same industry and have some shared economic interest; however, Trump’s order has the potential to greatly expand on this, allowing the associations to drastically grow in size, and band together for the sole purpose of offering health insurance.
Currently, the policies available through these associations are regulated by the mandates of the ACA. Most importantly, plans are required to provide coverage for 10 essential health care benefits. Those 10 essentials benefits are:
- Ambulatory patient services
- Emergency services
- Maternity and newborn care
- Mental health and substance use disorder services
- Prescription drugs
- Rehabilitative services and devices
- Laboratory services
- Preventative and wellness services, including chronic disease management
pediatric services, including dental and vision care
Obamacare requires that health plans also cover birth control and supplies for breastfeeding mothers. The actions taken by Trump could loosen some of the coverage requirements of the ACA, making the plans cheaper and more attractive to individuals with fewer health care needs. Also of note is that the Trump administration issued new rules in early October that allows a wide range of employers to claim a religious or moral objection to Obamacare’s birth control
Increased Use Of Health Reimbursement Arrangements
Qualified small employer health reimbursement arrangements (QSEHRAs) are arrangements or accounts set up by employers in situations where the employer does not provide group health insurance benefits and has fewer than 50 full-time equivalent employees. If employers choose to offer QSEHRAs, all full-time employees must be eligible for the same contribution percentage or amount. For example, if an employer contributes 40 percent of the cost of premiums for employees and any dependents, an employee with dependents would receive a higher contribution amount, but only because the premium for family coverage is greater than that for individual coverage. If an employee is eligible for a health insurance subsidy through the ACA, the amount of the subsidy will be reduced by the amount contributed to the employee’s QSEHRA.
Under QSEHRAs, employees purchase individual health insurance, and employers use the QSEHRA to help cover the cost of insurance premiums and other out-of- pocket health care costs, including copays, deductibles and prescription or non-prescription drugs. The accounts are set up with pretax funds and are fully-funded by the employer, as opposed to an employee payroll deduction. Qualifying expenses must be submitted to the employer for review, and the employer processes reimbursements directly to the employee from the funds available in the
The amount employers can contribute to QSEHRAs in 2018 is capped at $5,050 for individual coverage and $10,250 for family coverage. In order to set up a QSEHRA, employers must choose a start date for the arrangement and provide employees with at least 90 days notice before the start of the plan year. If the employer currently provides group insurance, it must be canceled before the QSEHRA commences.
President Trump seeks to allow employers to contribute more to these accounts and also contribute to plans that don’t meet the minimum essential health benefits mandate required by Obamacare. In his October 12 executive order, he directed the Departments of Treasury, Labor, and Health and Human Services to propose regulatory changes within 120 days. That could occur more quickly, but the most likely scenario is that no changes will occur until the 2019 plan year.
The IRS provides full details on the requirements for starting and administering QSEHRAs.
Impact On Costs
As changes to health care begin to take shape, people in need of health insurance could begin to see stark swings in the cost of coverage. Again, Trump’s planned changes could reverse insurer’s obligation to provide coverage for Obamacare’s essential health benefits, which means sick employees will have to pay a premium for health coverage as healthy employees choose lower cost health plans that include less coverage. Plans that provide the type of coverage that individuals with chronic conditions need will continue to become more expensive over time as those insured by such plans become riskier for health insurers to cover. If annual or lifetime coverage limits or pre-existing conditions enter the health insurance picture again, this population could have a very difficult time find insurance coverage at all, or will face substantial out-of- pocket expenses. Those who choose to buy more basic coverage, will face the possibility of greater prices if they eventually need a health plan that offers more coverage.
With all of the action and potential changes surrounding health care, the most important thing to consider is that none of the changes are immediate. It will be at least late in 2018 before any changes begin to take shape.
Small business owners will, however, have to take these changes into consideration as they make health insurance decisions over the next year. Along with the needs of the business, the needs of employees always come into play when these decisions are made. Knowing as much as possible about the changing landscape will help alleviate some of the pressure that is sure to arise over the next year. Business owners with an understanding of the health care landscape will become valuable resources for employees, as undoubtedly questions will begin to arise in the coming months, particularly if business owners make significant changes to their current
health insurance benefits.