14 May Affordable Care Act Update

Despite becoming law over four years ago, the Affordable Care Act continues to make headlines. Since it’s not easy to keep track of all the changes, let’s take a look at some of the more significant recent developments.

Elimination of Small Group Deductible Limits

A significant ACA change scheduled to take effect in 2014 involves annual deductible limits for small groups. Under this provision, small group health plan deductibles could not be more than $2,000 for individuals or $4,000 for families. Those who were concerned about the lack of flexibility caused by these deductible limits no longer have to worry.

The small group deductible limits were rather unceremoniously eliminated by the Protecting Access to Medicare Act, which was signed into law on April 1, 2014. Since these limits were retroactively eliminated back to the day the ACA was originally enacted, it’s almost like they never existed. This is welcome news for many small groups, which are typically those employers with up to 50 employees, but which may be employers with up to 100 employees.

However, it is important to note that the ACA’s annual out-of-pocket cost-sharing limits have not changed. Since these cost-sharing limits specifically apply to deductibles, among other things, employers must still be aware of indirect deductible limitations. The 2014 annual out-of-pocket limit is $6,350 for individuals and $12,700 for families.

Updated Model COBRA Notices

Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), employees and their families may have the option of staying on their former employer’s health insurance plan for a limited period of time after their employment ends. Despite having to pay the entire premium, including any portion previously paid by their employer, COBRA coverage has typically been cheaper than individual or family coverage because the premiums are based on the employer’s group rates. However, with the new Health Insurance Marketplace created by the ACA, this may no longer be the case.

Phyllis C. Borzi, Assistant Secretary of Labor for Employee Benefits Security, said that, “in many cases, workers eligible for COBRA continuation coverage can save significant sums of money by instead purchasing health insurance through the Marketplace…It is important that workers know that in some cases there is a Marketplace option as well.”

To let employees know they may have an alternative to continuing their health care coverage under COBRA, the Department of Labor updated its Model COBRA General Notice and Model COBRA Election Notice. According to the Department of Labor, these updated notices make it clear to workers that if they are eligible for COBRA continuation coverage when leaving a job, they may choose to instead purchase coverage through the Health Insurance Marketplace.

Employer Mandate

In February 2014, the Internal Revenue Service provided transition relief from the ACA’s employer responsibility provisions. Employers with 100 or more employees wanting to avoid the penalty must offer coverage to 70% of their full-time employees in 2015, and 95% in 2016 and beyond. Large employers that do not meet these standards will have to make employer responsibility payments beginning in 2015. Employers with 50 to 99 full time employees will not be subject to a penalty until 2016, provided they meet certain conditions.

At Setnor Byer Insurance & Risk, we are committed to guiding you through the changes coming in 2014. Check back with us periodically for future informational updates about the Affordable Care Act. If you have specific questions about the Act or if you are ready to take action and would like to see how Setnor Byer Insurance & Risk can help, contact us.

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