PPACA offers expanded coverage to the currently uninsured by subsidizing the cost of health insurance plans from the private market (via Exchanges) and by expanding MediCaid. Low-income employees currently covered by their small business group insurance plan, are now seeking affordable coverage for their dependents through these new avenues.
These insured employees reaching out to the Exchanges for subsidized dependent coverage are quickly finding out their family is ineligible for federal help solely due to the existence of their employer group insurance plan. Once clamoring for employer based group health insurance, the employees are now demanding the employer plan be canceled so that Exchange subsidies can be accessed for their entire family.
Many employers may see this as an easy out of the benefit business. With no barriers to the individual market, the employer may see this as an option for everyone. Could it be that easy? Low-income subsidy-eligible employees and their families head to the Exchange while the rest of the group hits the guaranteed coverage options within the individual market? The answer is not so straightforward. Any professional benefit agent could point out the obvious problems.
Everyday issues that might be considered include:
- Employees age 65 and over need time to prepare for a switch to Medicare and all it entails.
- Employees with household incomes below FPL levels of 250%-150% need to understand their private Exchange policy will not be issued as applied for.
- Everyone needs to know new policies both in and out of the Exchanges will be providing substantially reduced provider lists.
- Those seeking subsidies might get more than they asked for. Part or all of the family may find they have fallen into a MediCaid plan (MediCal in CA) with no way back to the private market.
- Individuals, especially those with specific needs, have no guarantee that providers, services, therapies and drugs will be available to them.
- Employers need to understand the tax consequences of such a move.
Individual needs aside, the markets inside the Exchanges are a mess at best. Quoted benefits and costs are merely estimates. Benefits outlined are merely a promise of coverage written on a government spreadsheet. Most States haven’t even produced specimen policies for the professional to inspect for detail.
The private market is functioning, but only as fast as the State will approve plans for sale. It could be December before we get a glimpse of what the breadth of private options really looks like. Do we really want to make decisions based only on what can be seen today?
Before any employer writes that cancellation letter, they need to remember why they had the group plan in the first place. Canceling coverage and dropping people into an unknown myriad of issues is not going to further your goal to attract and retain quality employees.
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