The Chamber of Commerce of Greater Milford held their First Quarter Membership Luncheon on Wednesday, January 23, at the Rookery North on Rehoboth Boulevard in Milford. While members dined on chicken Caesar salad, quesadillas or hamburgers and fries, John Allen of the Allen Insurance Group presented information on the Patient Protection and Affordable Care Act.
Allen, along with the founder of Allen Insurance Group, Brad Allen, explained the effect of healthcare reform on businesses throughout the country. Allen explained the foundations behind the bill, which included providing accessibility to health insurance for everyone, to control health insurance rates, to create accountability for insurers, to provide guaranteed coverage without exclusion for pre-existing conditions and an increase in transparency in regard to consumer protection. The act became law on March 23, 2010.
“Many people believe that the legislation means free health insurance for everyone, but that is not the case,” Allen explained. The fact is that the law contains many complex provisions that are difficult to interpret, even for this within the industry, and some of these provisions could have an impact not only on business, but on individuals as well.
States were given the option of creating their own plan or working in partnership with the federal government. Delaware chose to use the federal government plan with some minor adjustments, which the law allows. Some of those adjustments include full coverage for those with autism and a “mini-COBRA” plan requiring employers with less than 20 employees to offer COBRA insurance.
Open enrollment under the Affordable Care Act begins October 1, 2013, and Allen expressed industry concerns that the plan would actually be up and running by that time. In addition, people will be required to purchase insurance coverage by 2014, or face penalties. There are exceptions to the requirement, however, as those with religious objections to health care, undocumented immigrants, those who are incarcerated, and members of Indian tribes are exempt. In addition, any one whose family income is below the threshold for filing taxes will not be penalized for not purchasing coverage. In 2010, those amounts were $9,350 for individuals and $18,700 for families. Anyone who must pay more than 8 percent of their income for health insurance after tax credits and employer contributions is also exempt.
“In 2014, the penalty for not purchasing health insurance is $95 per adult and $47.50 per child, up to a maximum of $285 per year,” Allen explained. “The concern is that many people will simply choose to pay the penalty rather than pay insurance premiums that will be significantly higher than $285 each year.”
Employers also face requirements under the law. Employers with more than 50 employees must not only offer coverage to employees, the insurance must cover at least 60 percent of covered health care expenses and an employee may not be required to pay more than 9.5 percent of family income for the coverage. This prevents problems for employees related to privacy laws, according to Allen.
“Is an employer going to ask an employee what their family income is? Isn’t that a HIPA violation?” Allen asked. Allen concluded by explaining that there are still many concerns about the law, including rate hikes, the design of the plan, and network providers.
“Some experts predict that the premiums for health insurance for young adults could rise between 120 and 130 percent,” Allen stated. “The concern is that the costs will rise to the point that families prefer to have no coverage and pay a tax penalty rather than pay the significant costs for health insurance offered by employers.” In addition, the new law contains at least 18 new tax laws that could present even more problems in the upcoming year as employers struggle to meet the requirements under the law while maintaining privacy required by other governmental agencies. The law also requires a significant amount of communication between governmental agencies.
“This law will require governmental agencies to communicate much more effectively,” Allen said. “The internet portal designed to administer the policies under the law must connect Social Security to the Internal Revenue Service to Immigration and even to Homeland Security.”