For Employers

Health reform will bring a number of improvements and additional benefits for consumers - but at a cost. These changes looks different for every consumer. Rates will be higher, but some customers will pay less than they do now. Some will pay more. Find out more about health care reform and how you can get the most benefit from the law.

What does health care reform mean for employers?

Small Business Tax Credits

To encourage small businesses to offer health insurance coverage to their employees, the Affordable Care Act offers a temporary tax credit for some small employers.

There are threshold requirements for the employer’s contribution, the number of employees and the average salary. Small businesses’ insurance coverage is subject to other provisions of the law, such as Essential Health Benefits.

Qualifying small employers may draw the credit no more than two years and, beginning in 2014, can only access it through the Small Business Health Options Program (SHOP) Exchange.

In the Spotlight

Health Care Reform and Small Business Tax Credits

Grandfathering

"If you like your plan, you can keep it" seemed to be the Affordable Care Act motto when it was signed into law in 2010. To "keep the plan you like,"" you must remain on what is referred to as a "grandfathered plan" or a plan that existed before March 23, 2010 (when the law was passed) and has not undergone particular changes.

Grandfathered plans are exempt from some provisions of the Affordable Care Act, like providing certain preventive services at no cost-share, but must implement others, like no waiting periods longer than 90 days.

Additionally, changes made to grandfathered plans including changing deductibles, copayments and coinsurance could result in the loss of grandfathered status.

In the Spotlight

Health Care Reform and Grandfathering

Exchanges

Exchanges (also known as Health Insurance Marketplaces) are online marketplaces where individuals, families and small businesses can shop for coverage.

Exchanges also serve many functions for implementing the Affordable Care Act, including allowing individuals and small businesses to shop and compare coverage, providing standardized information about the coverage and pricing and, perhaps most importantly, determining eligibility for and connecting individuals with federal subsidies to purchase insurance.

While Exchanges will be implemented in all 50 states, some states have chosen to implement their own, state-based Exchanges, while the federal government will implement Exchanges in others, and still other states will have a hybrid version, called a Partnership Exchange. North Carolina plans to operate under a Federally Facilitated Exchange (FFE) in 2014.

In the Spotlight

Health Care Reform and American Health Benefit Exchanges

Subsidies

The Affordable Care Act got its name from the provisions intended to make health insurance coverage more affordable to the majority of the uninsured individuals in the country. The law accomplishes this primarily through two kinds of subsidies: one covers a portion of the premium and one reduces eligible consumers’ out of pocket expenses.

These subsidies, offered exclusively through the Exchange, are only available to qualifying individuals and families who are at 400% of the federal poverty level In 2012, that results in those with an income of less than $45,960 for individuals and less than $94,200 for families of four.

In the Spotlight

Health Care Reform and Health Insurance Subsidies

Agents and Brokers

Health insurance brokers will no doubt be affected by the Affordable Care Act – their services will be especially needed to explain the complicated changes and opportunities for businesses and individuals.

The Affordable Care Act makes many sweeping changes to how health insurance is sold, including new requirements on rating, medical spending and Exchanges (please see Exchanges section or Spotlight).

Brokers will be at the forefront of these changes, as the primary actors between health insurers and consumers.

In the Spotlight

Health Care Reform and Insurance Brokers

Small Business Health Options Program

In 2014, small businesses in NC with up to 50 employees can purchase health insurance coverage through the Small Business Health Options Program (SHOP).

Similar to the Individual Exchange, the SHOP is meant to offer small employers access to a range of health insurance plans provided by commercial insurance companies that meet the same minimum essential health benefit standard, in a format that allows employers and employees to compare their choices and pricing options.

Starting in 2016, the SHOP will be expanded to include employers up to 100 employees and in 2017, states are allowed to open the SHOP to employers of more than 100 employees.

In the Spotlight

Health Care Reform and American Health Benefit Exchanges

Essential Health Benefits

The Affordable Care Act includes a requirement that all non-grandfathered individual and small business insurance plans must cover a certain set of services within 10 categories established by the Institute of Medicine.

Though the 10 categories are dictated federally, including things like maternity care and pediatric dental care, the specific services that must be provided are determined at the state level by the selection of a benchmark plan.

In North Carolina, the benchmark plan is a BCBSNC plan and covers a comprehensive set of services that all North Carolina health plans must now offer in the individual and small group markets.

In the Spotlight

Health Care Reform and Essential Health Benefits

Employer Impacts

The Affordable Care Act (ACA) affects employers in numerous ways. These range from new benefits requirements for small businesses to a shared responsibility requirement for large businesses.

Some small businesses who offer health insurance coverage may be eligible for a tax credit while some large businesses who offer health insurance coverage may still be subjected to additional taxes and fees.

In the Spotlight

ACA Employer Impacts

Health Reform and Large Employers

Wellness

Employers have long been the primary source of health insurance coverage in this country. As the nation's health continues to deteriorate, employers' costs have risen exponentially. A few unhealthy employees can account for 25-30% of an employer's overall health care costs.

The Affordable Care Act has several provisions intended to enable employers to help their employees maintain or improve their health. The allowable incentive for employees participating in a company-sponsored wellness program increases from 20% to 30% and there are grants available for certain small businesses to implement a new program.

In the Spotlight

The Affordable Care Act and Wellness Programs

Summaries of Benefits and Coverage

Summaries of Benefits and Coverage and Uniform Glossary documents are a requirement of the Affordable Care Act that went into effect in September of 2012.

The documents are intended to help consumers as they compare and shop for health insurance companies by explaining benefits in a consistent manner.

The federal government compares these documents to the nutrition labels found on prepared food packaging, but evaluating a health insurance plan’s benefits can be a bit more complex than evaluating the nutritional value in a can of peas.

In the Spotlight

Health Care Reform and Uniform Coverage Documents

Premium Impacts

Premiums will increase for three reasons:

  • Adverse selection. The Affordable Care Act (ACA) limits how much premiums can vary based on a person's age or health condition, which means younger and/or healthier people will subsidize coverage for older individuals. This increases the likelihood that younger, healthier people may choose to pay the relatively low penalty and wait to purchase health insurance until after they get sick or injured, thus driving up costs for everyone else.
  • New taxes imposed by the ACA. The variety of new taxes ($8 billion in 2014, increasing to $14.3 billion in 2018) will be passed to the consumer through premium increases.
  • Additional benefits required by the ACA. Starting in 2014, all health insurance policies will be required to include new mandated benefits. This means millions of people will be required to purchase health insurance plans that are more comprehensive, and more expensive, than they currently have.
Taxes and Fees

The Affordable Care Act (ACA) expands coverage dramatically with a combination of the individual mandate, federal subsidies to make insurance more affordable for low- and middle-income people, and the potential expansion of state Medicaid programs.

Most people agree that expanding health insurance coverage to millions more people in the United States is a good thing, but who picks up the tab?

There are many new taxes and fees included in the law designed to finance the coverage expansion and other new or reformed programs. These taxes include several on the insurance industry, medical device community, pharmaceuticals, some employers, and a specific fee for using the Exchange.

While paying for reform is important, new fees could result in more expensive premiums.

In the Spotlight

ACA Taxes and Fees