VOL. 6 | NO. 27 | Saturday, June 29, 2013
The Business of Law
Attorneys Busy With Nuances of US Health Care Reform
By Jennifer Johnson Backer
Most businesses are well aware of key provisions in the Affordable Care Act, like the mandate for larger employers to provide health care insurance coverage to employees.
But attorneys are busy at work on some of the lesser-known aspects of the new health care law.
Beginning in January, businesses that employ 50 or more full-time equivalent employees must provide health care plans that meet minimum essential benefits requirements. But the largest employers – those that have 200 or more employees – also must make sure employees are automatically enrolled once the U.S. Department of Labor issues guidance in January 2014 or shortly after, said Craig Cowart, a partner with Fisher & Philips.
“I’m confident most insurance carriers are working with employers on that now,” he said. “Employees will be able to opt out, but it’s definitely something employers need to be made aware of.”
While the new rule will be a significant change for larger employers, Cowart pointed to studies that show automatic enrollment requirements are likely to increase the number of Americans with health care coverage.
Larger employers also need to take note of new requirements that will prohibit most group plans from offering better health insurance coverage to highly compensated employees, Cowart explained.
Large employers that offer plans with more expensive premiums and benefits to all employees could still be in violation of the new health care law if higher paid employees select more expensive plans, while other employees select cheaper options with less robust coverage.
“To some degree, it’s a matter of trying to predict what the plan selection is going to be,” Cowart said.
Geoffrey Lindley, an attorney and member with Rainey, Kizer, Reviere & Bell PLC, said businesses also should be aware of new rules that require companies to offer all employees health care coverage within a 90-day waiting period. Those rules also apply to companies with more than 50 full-time or full-time equivalent employees.
The coverage options offered by employers cannot cost more than 9.5 percent of the employee’s household income and must pay for at least 60 percent of covered health care expenses. By 2015, the Internal Revenue Service has said businesses must provide coverage for dependants of full-time employees up to age 26 but not spouses.
“Many companies already are ramping up to offer dependent coverage,” Lindley said, adding that many already have adopted plan design changes required by the Affordable Care Act.
Attorneys also pointed to new whistleblower provisions in the Affordable Care Act that prevent employers from retaliating against an employee that reports potential violations of the law’s consumer protection provisions, such as denying coverage to employees with pre-existing conditions and imposing lifetime limits on coverage. Employers cannot retaliate against any employee that receives a federal tax credit or subsidy to purchase insurance through the employer or through an exchange.
With health insurance marketplaces that will allow consumers to shop for health care coverage on exchanges set to go live Oct. 1, employers must provide both new employees and current employees about their right to shop for health insurance on the new marketplaces.
Michael Sheridan, an attorney with Butler, Snow, O’Mara, Stevens & Cannada PLLC, says employers need to be prepared to include this notice in their communication plans. The notice requirement could prove challenging for employers because employees are likely to ask a lot of questions about the new exchanges, pricing and the new law, he explained.
“I’m not sure that they will be in the position to answer all of these questions,” Sheridan said.
While Sheridan said there are still many “vast unknowns” about the new health care law and the health care exchanges, he believes it is likely that costs will increase for both employees and employers.
“The intent of the law is to bring uninsured people into the system, and we have to find a way to pay for it,” Sheridan said. “That means premiums will increase in order to cover the costs of the new people coming into the system.”
Many of the costs associated with the Affordable Care Act won’t be clear until the fall, when the new exchanges make their debut, he said.
Timothy Finnell, founder of Group Benefits LLC, agreed with Sheridan’s assessment.
Employers who are considering chucking their group insurance, so employees can buy coverage on the exchange, should think again, he said.
“Early signs are that the low-cost plans on the exchanges will be pretty crummy insurance,” warned Finnell, who anticipates the most affordable plans will have high deductibles, co-pays and a more limited choice of providers.