Is Your Company's Health Plan "Qualified"?
As many construction employers are trying to figure out exactly what health care reform will mean for them, one issue that raises questions for employers, insurers and employees alike is that of a "qualified health benefits" plan. As mentioned in AGC's What Does a Health Insurance Mandate Mean for Construction Industry Employers, employers will be required to provide a "qualified health benefits" plan for all employees and their dependents or face stiff penalties. That is, if H.R. 3200, the much-debated proposed bill known as America's Affordable Health Choices Act of 2009, is passed by Congress.
According to H.R. 3200, employers must provide health benefits plans deemed "qualified" by the federal government, or face penalties of up to $100 per day, per employee. A newly appointed Commissioner of the Health Choices Administration would set many of the standards that would be designed to:
- Prohibit coverage exclusions of pre-existing health conditions;
- Require premiums to be determined using adjusted community rating rules, which prohibit insurers from pricing health insurance policies based on health factors;
- Require coverage to be offered on both a guaranteed issue and guaranteed renewal basis;
- Impose new, non-discrimination rules; and
- Comply with a medical loss ratio - the portion of health plan revenue that does not cover administrative or marketing expenses, taxes and profits.
Once deemed qualified, health plans will be able to participate in a newly created, state-run Health Insurance Exchange, similar to Travelocity for the travel industry, which will help individuals and small businesses comparison shop for health insurance. The Exchange would be regulated by the Commissioner so that insurance companies cannot charge wildly different amounts for similar health coverage. They will, however, be able to set rates based on age. Uninsured individuals and employers with 10 or fewer employees would be able to participate in the exchange during year one (2013), while employers with 20 or fewer employees will be able to participate in year 2014. The Commissioner would have the authority to allow larger employers to participate during subsequent years.
Although the commissioner would be responsible for setting many of the standards required for qualified health plans, H.R. 3200 specifically details minimum requirements that must be included in each plan before the additional standards are imposed. These standards would form an "essential benefits package" and would be required to cover:
- Outpatient hospital and clinic services, including emergency room services;
- Services of physicians and other health professionals;
- Services, equipment and supplies necessary to the services of a physician or health professional in appropriate settings;
- Prescription drugs;
- Rehabilitative and "habilitative" services (i.e., services to maintain the physical, intellectual, emotional and social functioning of developmentally delayed individuals);
- Mental health and substance use disorder services;
- Certain preventive services (with no-cost-sharing permitted) and vaccines;
- Maternity care;
- Well-baby, well-childcare, oral health, vision, hearing services, equipment and supplies for those under age 21.
In addition to the requirement that each plan must cover at least 70 percent of the full value of benefits in the essential benefits package, employers must also contribute a minimum of 72.5% of the premium for the lowest cost qualified plan offered by the employer for individual coverage, and at least 65% for families. This contribution would be prorated for part-time employees, based on the employee's weekly hours worked, and out of pocket maximums will be capped at $5,000 for individuals and $10,000 for families.
For employers who currently provide health insurance to their employees, there is a 5-year grace period (beginning 2013) for which employment-based plans could keep their existing coverage and not have to comply with the minimum requirements of the bill. Upon expiration of the grace period, the plan would have to meet the minimum essential benefits requirements or face all required penalties. The only exception is for health plans that are subject to collective bargaining agreements (CBA), which are exempted from providing the minimum essential benefits as defined in the bill through the expiration of the CBA or one year after enactment of the legislation, whichever is later.
While the final picture of health care reform is vague, it is likely that employers will have to comply with widespread changes over the next several years. Before change is mandated, employers should take this time to review its current benefit structure and compare it with the requirement of the essential benefits plan including:
- Compare actuarial rates and cost-sharing ratios to the proposed mandate;
- Begin introducing wellness and prevention elements into current plans;
- Check out what other employers have done to contain cost and partner your employees to do the same;
- Gradually implement changes during your open enrollment periods now through 2012; and
- Communicate honestly and often with employees.
Taking the next two years to get ready by gradually moving toward the minimum requirements of the essential benefits plan will soften the blow for employers and employees alike.
For a complete summary of H.R. 3200, read AGC's Facts about the Proposed Health Care Reform Legislation. To easily contact your congressman with your company's concerns about H.R. 3200, visit AGC's Legislative Action Center today.
* This is one of many articles in AGC's Health Care Reform series.
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