For many, healthcare insurance has been a personal or family need they have taken care of through their employer. Now, whether or not they continue to have a policy purchased through their employer, employees are asking their employer for the information on what the employer will offer and whether those offerings will meet the individual’s “shared responsibility” requirements. The individual shared responsibility mandate has become a greater concern this year, as the penalty to the individual for not having healthcare jumps in November from $95 or 1 percent of income to $325 or 2 percent of income.
Open enrollment on the federal health exchange begins November 15.
This is the first of a three-part series for employers to help prepare their employees to make decisions on healthcare coverage.
It will be helpful to first clarify what and when open enrollment is. Open enrollment is the period of time during which a policy can be purchased, and once the open enrollment period has closed, the enrollee is locked into whatever choice he has made for the year. The specific period, however, depends on where the policy is purchased. If an employee decides to opt for a policy through the government exchange, now called the “individual marketplace,” that open enrollment period is Nov. 15, 2014, to Feb. 15, 2015, for coverage to start Jan. 1, 2015. This may or may not coincide with the open enrollment period for the plan offered by the employer, which is based on the company’s plan year. Whatever the company’s plan year is, its open enrollment period is the 30 days that precede it.
A third open enrollment period is that for SHOP, the Small Business Health Options Program. This, explains Stephanie Waldrop, principal of Employee Benefits International, is an online public health exchange where small employers can purchase coverage for their employees. Currently available for businesses with 50 or fewer full-time equivalents, it is scheduled to expand in 2016 to businesses with 100. This year, it has a perpetual open enrollment. “If you get your application in by the 15th of any month, you can get coverage effective as of the first of the following month,” she says.
There is a “qualifying event” provision by which an individual can enroll in a coverage plan midyear. Qualifying events include marriage, having a baby or adopting a child. And employers may also allow the open enrollment of the exchange for the individual marketplace to be considered a qualifying event for their program by specifying it on their Section 125 Plan document, which, Waldrop explains, “an employer must have if he offers an employee benefit program and pre-taxes the employee’s portion of the premium.” But she notes, “Most employers should be having the conversation [about this option] with their broker consultant well in advance of the exchange open enrollment or knowing their employees are interested.”
Outside of the “qualifying event” allowance, individuals cannot change their policy once open enrollment has closed. So it is important to empower employees to make the best decision for themselves. This starts with knowing what choices the employer has made regarding healthcare coverage. “Part of it is the employer understanding the healthcare needs, at a high level, of the employees,” observes Bob Campbell, senior vice president of business development and chief strategy office of Phoenix Children’s Hospital. Having pediatric care, for example, is more important to a young work force of child-bearing age or who have children than to an older work force.
Some aspects of coverage are mandated under the Affordable Care Act. And, while requirements for the employer to be compliant with the ACA are complex, it is much less complicated for the employee.
All individuals must have minimal essential coverage (MEC). Chris P. Scherzer, benefits practice leader at Brown & Brown Insurance, explains that employees in Arizona have five options to get this coverage: They may enroll in a health plan at work if their employer offers one, with the cost possibly partially underwritten by the employer; they may purchase a policy on the public marketplace, and possibly be eligible for government subsidy if their family income is below a certain threshold; they may sign up for Medicaid or AHCCCS; they may sign up for Medicare if they are disabled or at least 65 years old; or they may purchase a policy through a broker such as Brown & Brown Insurance, which, Scherzer says, could be the same policy as through the marketplace but would not allow for any medical underwriting.
Jeff Stelnik, senior vice president of strategy, sales and marketing for Blue Cross Blue Shield of Arizona, notes, “The federal healthcare exchange site focuses just on the basics of processing the transaction, and lends itself to a price-only decision.” But he believes healthcare goes beyond price to include the network — a topic In Business Magazine will cover in the October installment of this series, “Networks and Coverage from the Workplace” — and customer service. Plus, individuals may be able to make the payment for premiums on a pre-tax basis through their employer, which would impact their ultimate yearly cost.
There is an important distinction Waldrop points out between the federal and state exchanges and private exchanges: Qualifying employees may receive tax credits, subsidies or other assistance only through the government exchanges.
Says Waldrop, “The law is changing so much, employers need to be constantly analyzing with their broker or advisor the best fit for their employee program.” They can also be working with their broker partners to educate their employees, she says, noting, “The legislation is so complex and it has changed so many times, and most employees don’t have the same level of resource of broker or consultant advising them of all the right steps to take.”
Even outside of open enrollment, it can be beneficial for employers to continue to educate their employees as things change. Observes Waldrop, “It’s good just to create the relationship that they’re looking out for their employees, making sure they understand.” In fact, helping their employees work through the continually changing choice of policies within the shifting maze of regulation to make the best decision during the appropriate open enrollment period has become a critical function for employers.
Individual Marketplace Open Enrollment: Nov. 15, 2014 – Feb. 15, 2015
SHOP Open Enrollment: perpetual for 2014
Below are the penalties to individual for non-compliance with the individual mandate of the PPACA
Assessed to be the greater of:
2014: $95/adult, $47.50/child, maximum of $285/family Or 1% of family income
2015: $325/adult, $162.50/child, maximum of $975/family Or 2% of family income
2016: $695/adult, $347.50/child, maximum of $2,085/family Or 2.5% of family income
Information for Businesses healthcare.gov/small-businesses
ObamaCare Individual Mandate obamacarefacts.com/obamacare-individual-mandate.php
The SHOP Marketplace healthcare.gov/what-is-the-shop-marketplace
Series: A Look at Healthcare Benefits
- Healthcare: The Employer’s Role in Employee Choices (Sept. 2014)
- Healthcare: Networks and Coverage (Oct. 2014)
- Healthcare: A Tool to Strengthen Productivity (Nov. 2014)
To reference published segments, please access the archived “Healthcare” articles on the
In Business Magazine website, www.inbusinessphx.com.