ACA: Ready! Fire! Aim!

“READY!” On or before October 1st, employers across America are required to inform their employees of their health insurance options under the Patient Protection and Affordable Care Act (also known as ACA). By January 1st of 2014 (just around the corner), individuals and employees of small businesses will have the option to access insurance coverage through the ACA health insurance exchanges, now known as the Marketplace. “FIRE!” Open enrollment under the law will begin October 1st.

Despite the looming deadlines, some important issues are still unknown such as the cost of insurance to the consumer and verification of employee health coverage.

There are many aspects of the health care reform that are helpful for consumers

• no limit on annual or lifetime health claims
• no exclusions for pre-existing conditions
• allowing children to remain on a family policy until age 26
• maximum out-of-pocket cost caps
• no cost-sharing for preventive services

These changes, however, do not come for free. The cost of insurance is likely to rise in the short term as the normal pricing models that predict costs are no longer applicable.

In addition to these cost-drivers, the cost of insurance also will include factors such as your age and where you live. Why? A 60 year old spends more than four times the amount of a 20 year old for health care services. That means that, under the new law, insurers can charge at least three times more for the older customer. Who makes up the shortfall? Younger, low-cost participants would be expected to pick up the difference for the older consumer.

However, there’s a flaw. Though the ACA program will mandate that all citizens buy health insurance, it may be less expensive to pay a tax penalty than to actually buy coverage if you are a healthy, young, low wage employee. That means the American youth that the system relies upon to spread the cost of insurance may actually opt not to pay for insurance. They, however, will not be refused service when they walk through the emergency room doors in need of care – the most expensive doors of a hospital.

The other cost factor is where you live. Hospitals near urban centers tend to cost less than more rural hospitals that need more money to keep their emergency rooms open and doctors well-compensated.

We recently sponsored a briefing offered by the National Federation of Independent Business (NFIB) at which many of the ACA-related issues were discussed. To see their ACA Playbook, click here. Also, you can visit the U.S. Department of Labor for model notices that you can deliver to your employees to comply with the October 1st deadline. You may also subscribe to the Department of Labor’s web page which will keep you updated on changes and rules as they occur.

“AIM!” That’s what we do.Under any circumstance, you can contact us for guidance as we’d like to be your insurance broker and help you navigate through your options to comply with the mandates that lie ahead.