Unless reversed through some miraculous political turn of events in the coming days, the era of Obamacare is getting closer at hand. Like it or not, here are a few major and minor adjustments to keep you abreast of what is in store for not only 2012, but 2013 and 2014, as well. And if you are an employer or small business owner here in Mississippi, get ready because major changes are coming down the pike:
For 2012, any plan issuer will have to provide notice in writing of any benefits change at least 60 days beforehand to plan sponsors and participants. Additionally, healthcare plan summaries will have to meet new formatting and content guidelines for clarity to participants. Finally, group health plan participants could actually get rebates in 2012 for conditions stemming from medical loss ratios; that being, the percentage of premiums spent on clinical services and efforts to improve health care quality — as opposed to administrative overhead. As a point of reference, the minimum medical loss ratio with this is 80 percent for individuals / small groups and 85 percent for large groups. (1,2)
2013 brings in four important changes that employers must both recognize and publicize:
>> Companies will have to disclose the value of employer-sponsored health insurance coverage to employees on W-2 forms for the 2013 tax year
>> Companies will be required to inform workers about healthcare exchanges, healthcare premium subsidies and any free choice vouchers that are available.
>> Flexible Spending Accounts will have a $2,500 spending cap adjusted annually for inflation
>> Either the plan issuer or the plan sponsor will have to pay an annual per-member fee to the Patient-Centered Outcomes Research Institute for fiscal year 2013 (go figure what that is about). It increases to $2 dollars per member in 2014. (1,2)
2014 is a major year for Obamacare with significant changes involving the “new world” of healthcare insurance brought to us from Washington, D.C:
>> By 2014, firms with 50 or more employees will be required to offer at least a minimum level of healthcare coverage to active employees. By this, minimum coverage is defined by the federal government using two criteria: the health plan chosen has to cover at least 60 percent of covered healthcare costs and the plan can’t cost a worker more than 9.5 percent of his or her household income.
>> If firms with 50 or more employees can’t meet this test, they will pay a penalty of $2,000-$3,000 per employee. (And there are those who see the cost of the penalty being less than the cost of implementation.)
>> Employers will annually be required to inform the IRS if they are offering minimum healthcare coverage or not, the duration of any waiting period as well as the names, addresses and taxpayer IDs of all full time employees.
>> A company may be eligible for the Small Business Health Care Tax Credit if it employs 25 or less with annual wages are $50,000 or less.
>> Any wellness program incentives cap rises from 20 percent to 30 percent.
>> Businesses with 200+ employees will be asked to automatically enroll all full time and part-time employees into group health plans. Certain employees will be given the option to opt out.
>> State health insurance exchanges are supposed to be up and running by 2014 providing a free choice voucher to qualifying employees.
>> Employers cannot make employees wait more than 90 days for health insurance and non-grandfathered plans must also provide coverage for clinical trials related to life-threatening illnesses.
This month’s Parting Shot: Now whether these measures will lead to better, more affordable healthcare for all Americans is anyone’s guess. But for certain it looks like Washington, D.C., and the IRS will become even involved in our financial lives. With these new measures of red tape being proposed, we could be in dire economic straits down the road if they do not improve our country’s overall health care dilemma. Put all this together with proposed expansion by some in Congress of Medicaid and we’ve got the potential for a real tiger by the tail. Weighing these options reminds me of a famous quote by Will Rogers who once said, “Be careful we’re not getting all the government we’re paying for.” Many might say today ole Will had it right.
Ike S. Trotter, CLU, ChFC, is a financial advisor in Greenville. Securities and investment advisory services provided through Woodbury Financial Services Inc., Member: FINRA, SIPC and Registered Investment Advisor, P.O. Box 64284, St. Paul, MN 55164. Tel: 800.800-2638. IKE TROTTER AGENCY, LLC, and Woodbury Financial Services are not affiliated entities. Information and opinions expressed are those of the author and not necessarily those of Woodbury Financial Services Inc.