Let’s talk reforms: Communicating with employees crucial

Connie Schulthies

According to the results of one recent poll, 40 percent of Americans didn’t know the provisions of federal health care reform law remain in effect. That means an employer benefits communication program will play a more important role than ever in disseminating information about changes in health insurance.

Employers are required to provide written notices to all employees about the new health care exchanges before Oct. 1. In addition to that notice, it’s a good idea for employers to explain what coverages they offer, demonstrate the value of their benefits packages and emphasize their ongoing commitments to the well-being of employees.

Start with the basics and keep it simple. Some health care reform rights and protections apply to plans in the soon-to-open health insurance marketplace or other individual insurance. Some apply to job-based plans. Some apply to all health coverage. These rights and protections provide even more choice and control over health insurance coverage when key provisions of the law take effect in 2014.

The Patient and Affordable Care Act changes the way health insurance companies operate, extends insurance to people who weren’t previously covered and expands the benefits of many policyholders while attempting to lower the cost of care. More specifically, the law:

  • Creates health insurance marketplaces as a new way for individuals, families and small businesses to purchase health insurance.
  • Makes health insurance coverage available to those with pre-existing conditions with no limitations.
  • Holds insurance companies accountable for rate increases.
  • Makes it illegal for health insurance companies to arbitrarily cancel coverage because someone becomes sick.
  • Protects patients’ choice of doctors.
  • Allows young adults under age 26 to remain covered under their parents’ health insurance.
  • Provides for preventive care.
  • Ends yearly and lifetime dollar limits on coverage of essential health benefits.
  • Guarantees the right to appeal insurance company decisions.

Moving beyond the rights and protections, let’s look at the individual mandate. This is the part of the law that requires Americans to purchase health insurance. 

If someone can afford health insurance but doesn’t have coverage in 2014, he or she could have to pay a penalty — and must also pay for all of his or her care.

The penalty for 2014 is 1 percent of annual income or $95 per person for the year, whichever is higher. The penalty increases every year. In 2016, for example, the penalty climbs to 2.5 percent of income or $695 per person, whichever is higher. In 2014, the penalty for uninsured children is $47.50 per child. The most a family would have to pay in 2014 is $285.

It’s important to remember that someone who pays the penalty won’t receive any health insurance coverage. He or she will be responsible for 100 percent of the cost of his or her medical care.

After open enrollment ends on March 31, 2014, an individual won’t be able to obtain health insurance through the marketplace until the next annual enrollment period, unless he or she has a qualifying event.

To avoid the penalty in 2014, insurance must provide what’s deemed minimum essential coverage. If you are covered by any of the following in 2014, you’re considered covered and don’t have to pay a penalty:

  • Any marketplace plan or any individual insurance plan you already have.
  • Any employer plan (including COBRA), with or without grandfathered status. This includes retiree plans.
  • Medicare or Medicaid.
  • Children’s Health Insurance Plan (CHIP).
  • TRICARE (for veterans and their families).
  • Veterans’ health care programs.
  • Peace Corps volunteer plans.

Other plans also could qualify. Ask your health coverage provider.

If you don’t qualify for these situations, you can apply for an exemption from the penalty. You do this in the marketplace. Uninsured people won’t have to pay a penalty if they:

  • Are uninsured for less than three months of the year.
  • Have very low incomes and coverage is considered unaffordable.
  • Aren’t required to file tax returns because their income is too low.
  • Would qualify under the new income limits for Medicaid, but their state has not chosen to expand Medicaid eligibility. Colorado has expanded Medicaid eligibility.
  • Belong to a federally recognized Indian tribe.
  • Participate in a health care-sharing ministry.
  • Belong to a recognized religious sect with religious objections to health insurance.

Health plans that don’t meet minimum essential coverage don’t qualify as coverage in 2014. If you have only these types of coverage, you could face a penalty:

  • Coverage only for vision or dental care.
  • Worker’s compensation.
  • Coverage only for a specific disease or condition.
  • Plans that offer only discounts on medical services.

Ongoing communications will go a long way toward helping employees understand and make decisions as federal health care reforms are implemented.