As the Supreme Court ruled 5-4 to uphold the health care reform law, the various mandates are continuing to move forward, and employers need to be ready for the effects. Specifically, the health care exchange system will be a major change that employers must be ready to deal with, says Lee Doble, CLU, CEBS, managing director of Frank Crystal & Company.
"Smaller employers, which are those with fewer than 50 employees in most states and up to a 100 in other states, will see reduced flexibility in terms of plan offerings and in choices of carriers," Doble says. "This is partially because of the SBC requirement, partially because of the health care exchanges being established and partially because the medical-loss ratio requirement that has caused many insurance carriers that focused on the smaller-employer market to withdraw out of the market altogether."
Large employers could see some implications of the health care exchange system, too, Doble says. In his view, more large employers will offer multiple options. Of these options, the more modest will be designed to promote compliance along with the minimum essential coverage and the affordability requirements.
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"If you had been offering a limited benefit plan, sometimes called a mini-med plan, you need to prepare to be offering an affordable benefit plan meeting the minimal essential coverage standards as those plans will not qualify to avoid penalties in the future," Doble says.
Even voluntary insurance will be affected by the health care exchange system, Doble says. Life and disability insurance, for instance, will not be available through the health care exchange system, but employers will have a chance to offer those products on the private side.
"A big driver of the private exchanges will be the ability of employers to provide other insurance products, such as life and disability, alongside the medical plan offerings," Doble says. "Life and disability won't be available through the health care exchange, and we will probably move toward a defined-contribution model similar to what has happened to pensions and savings."
Along with the health care exchange, there will be a special feature allowing for catastrophic plans to be available to individuals under the age of 30, who might otherwise risk the penalties for not purchasing coverage, Doble says. In addition, employers can consider offering a standalone dental plan as a health plan offering coverage outside the exchange must offer the same plan and premium as inside the exchange.
"But this requirement won't prevent additional products being offered, especially to employers who don't qualify for purchase of coverage during the exchange," Doble says. "So there's much for employers to do in the next few months."
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