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Tuesday, February 26, 2013

Just What is Obamacare?

Twice in my career I have worked for someone whom almost everyone at work was scared to death. In both experiences the same dynamic was present in the workplace: there was an inner circle around the boss who did as they pleased and blamed him for it.  If they wanted to see something happen, they just told their staff "he said so" and nobody dared ask him.  The unpopular boss, while maybe justifiably challenging, had no idea about half of what was done in his name.

Such is the case with the Patient Protection and Affordable Care Act, also commonly referred to as Healthcare Reform (HCR) and "Obamacare." 

During the election I heard tales of small businesses that were going to have to discontinue benefits or fire staff because of the onerous tenants of this legislation. When I would dig deeper 90% of the time that business had less than 50 employees and was exempt from the law. Obamacare has become that unpopular boss on which you can blame everything because the bill is so complex that few employees can or will read and understand it.

So what is it exactly?  What businesses are affected?  Here is a really high level overview of the major provisions of a really complex bill.

  • First of all, as I said above, the bill impacts "large employers" defined as those having 50 or more employees. When I use the term "employers" below it means those who must comply.
  • Effective March 1, 2012 it required employers to notify new hires of the presence insurance exchanges as well as the tax implications if they elect coverage through exchanges.
  • Effective September 23, 2012 it required employers to make Summary Plan Descriptions in plain language so laymen can understand them. Note: I have pushed for this with every health plan I've administered since the 90's and this is long overdue. People should understand their coverage.
  • Upon the next renewal period after September 23, 2012 it requires that employers give their employees 60 days notice before making significant changes to their health benefits.
  • Effective with the signing of the bill, it bars employers or insurers from retroactively cancelling insurance coverage unless the employee has engaged in fraud or intentional misrepresentation.
  • Effective with the signing of the bill insurance plans that require the employee to designate a primary provider (think HMO here) must allow the employee, not the plan or employer, to choose the provider.
  • For health plans renewing after August 1, 2012 it required that women's preventative health services be covered by the plan with no employee cost-sharing.
  • Effective January 1, 2013 it limited contributions to your FSA (not including any employer contribution) to $2,500. 
  • Effective January 1, 2014 it eliminates annual limits on medical benefits.  No longer will seriously ill patients go into bankruptcy because their insurance capped below their expenses.
  • Effective January 1, 2014 no health plan may impose a waiting period of longer than 90 days for those electing coverage.
  • Effective January 1, 2014 pre-existing condition exclusions will be banned regardless of age (they are already outlawed for children under 19).
These are the major provisions that affect most employees. There are additional provisions designed to make sure that health plans don't favor highly compensated employees, that impose limits on awards in wellness programs that grant awards to employees, and that impose fees on insurance companies to help finance research into treatment effectiveness.

Finally you may note that I have left out discussions on the individual mandate. That is because, like my friends with the businesses of less than 50 employees, if you are covered by a health plan you are not affected by the individual mandate, i.e. you already have insurance. 

I have been administering the health plans of my employers for about 20 years.  I have seen sickening abuses by insurance carriers and concluded that except for an active and professional HR department, which many companies don't have, employees are on their own and often helpless in matters of insurance.  The reforms above have been needed for decades.

HCR is an imperfect bill reflecting Congressional Democrats obsession with highly compensated employees getting a better deal than others.  It also falls short of the most needed remaining reform: abolish FSA accounts and their use-it-or-lose-it provisions and allow HSA accounts for everyone regardless of plan.  Still, it is a major step forward in protecting employees and their dependents for insurance company abuses.

1 comment:

Wendy Spira said...

Good overview, Jim. I agree with you - complicated and flawed, but a step in the right direction. It will be a brave new world in just a few months...and we thought high deductible plans with HRAs or HSAs were a challenge...