Regardless of party affiliation, the high cost of health care is a great concern for many Americans who have watched their health insurance premiums double since 2013. A recent study found the cost of health care for a typical American family of four, covered by an average employer-sponsored preferred provider organization plan, is $28,166 annually.
U.S. health care is close to 18 percent of GDP. In Fort Worth, small to midsized businesses have hit a "ceiling of complexity" with the astronomical cost of providing health insurance to employees and/or their families. A short-term strategy leveraged by many employers has been to shift the increase in financial responsibility to the employees in the form of higher premiums and/or out-of-pocket exposure to the employee and/or their dependents. For most employers, employee benefits typically make up one-third of the bottom line. Employers, employees and families are in a difficult position to find the word "affordable" in the Affordable Care Act.
A 2017 executive order by President Trump and an ensuing Labor Department ruling focus on expanding the availability of three types of health coverage arrangements:
Association Health Plans The Labor Department ruling will make it easier for small businesses to band together to buy health insurance across state lines without the regulatory requirements of the ACA. An association can be formed for the sole purpose of offering an association health plan to its members. The Congressional Budget Office predicts 4 million people will enroll in AHPs, impacting individuals, sole proprietors, small employers, employees and their families.
Short-Term, Limited-Duration Insurance Short-Term Medical plans have been around for decades but were deemed noncompliant by the ACA, because the product did not meet the ACA definition of essential benefits, had limitations and did not provide coverage for pre-existing conditions. With the recent changes, short-term medical insurance can be purchased for up to 360 days and is a consideration for many healthy individuals who are no longer willing to bear the cost of a permanent coverage, either for them and/or their dependents.
Health Reimbursement Arrangements HRAs traditionally were utilized to reimburse employees for "unreimbursed medical, dental and vision benefits." The restrictions have been relaxed on HRAs, allowing employers to "reimburse premiums" on a tax-advantaged basis. Small employers may consider offering an HRA, in lieu of offering a group health plan, to protect the company from volatile increase and uncertainty in the future. However, in this scenario, the employees bear the risk of rising premiums and a volatile individual health insurance marketplace.
Is the final ruling final? Critics contend the arrangements are a way to work around the ACA requirement requiring plans cover essential benefits.
A coalition of 12 states have a lawsuit challenging the DOL ruling that allows health care plans to sidestep protections set up by the ACA. The IRS has issued a Frequently Asked Questions with open comment on whether the employer mandate (ACA mandated that employers with 51-plus employees must provide health insurance or pay a significant penalty) applies to small employers who offer coverage through an AHP, if that employer has fewer than 50 full-time employees. There is still a lot to learn, and the target is constantly moving. Now, more than ever, employers need to work with a professional who is experienced, up-to-speed on the changing legislation, and who makes your needs the No. 1 priority.
