The Business Journal asked local insurance experts about what's coming with health insurance coverage in 2015.
Offering insights in the following discussion are David Hodges, vice president, Vantreo Insurance Brokerage; Bud Martin, national practice leader for individual health and Medicare insurance and Jennifer Lunski, director of compliance, both of Wells Fargo Insurance Services USA, Inc. in Petaluma; Victor McKnight, principal of EPIC Insurance Brokers; Michael D. Parr, a Santa Rosa-based employee benefits consultant for Northwest Insurance Agency Inc., a division of George Petersen Insurance Agency; Jim Settles, senior vice president and employee benefits practice leader for Woodruff-Sawyer & Co. in Novato; and Jordan Shields, president of Arrow Benefits Group in Petaluma.What is changing for 2015 and how should employers be preparing?
David Hodges: My large groups are fairing better then small groups under 100 employees.Rates have been softened by the grandmother act for small groups. However, this will simply hold off the sharp rate increases coming next year unless California or federal lawmakers change the law. Groups with less then 50 employees should be prepared for higher out of pockets on their plans and higher costs for those plans.
Bud Martin and Jennifer Lunski: There are several big changes taking effect in 2015, depending on the employer's size.
For large employers with 100 or more employees, and some employers with 50-plus employees, the 2015 Affordable Care Act requirements will increase an employer's responsibilities and costs, such as 1) "play or pay" penalties, along with complex rules for tracking the hours of variable hour employees, 2) the collection of employee and health plan data as required under the new information reporting requirements, with returns due in early 2016 to the IRS, 3) obtaining a HPID number for self-insured plans and 4) collecting data and submitting the ACA Transitional Reinsurance Program Annual Enrollment and Contributions submission form.
All employers, regardless of size, should be closely re-evaluating: 1) benefit plan designs offered to employees, 2) employer contribution towards the cost of coverage for employees and 3) plan eligibility rules. For those employers with lower-wage employees, it will become of vital importance to understand the impact your decisions on these items, especially for these employees and their dependents who may otherwise be eligible for health insurance subsidies through Covered California or other government operated exchanges.
Victor McKnight: Small groups will see drastic changes to their plans and rates in 2015. They may need to reconsider which plans to offer and what amount they contribute. Due to increasing costs, health savings accounts, or HSAs, may not be a viable solution as the new ACA plans are rolled out.
Large employers will need to increase their focus on compliance. They will have new reporting requirements to adhere to and will need to work with their payroll company to make sure they have the ability to gather and report the information. Employers with seasonal or part time employees will need to establish rules to determine eligibility for health plans that comply with the ACA. With the complexity of the ACA implementation, it will be more important than ever for employers to seek advise from their broker or consultant.
Michael Parr: For one, in California the new-hire waiting period can be changed from the mandated maximum 60-day wait to 90 days or fewer at renewal in 2015.
Also, the first phase of the employer mandate will go into effect on Jan. 1, 2015. If you have 100 or more full-time equivalent employees, you must provide affordable coverage to 95 percent of your full-time employees and the dependents of those employees. The coverage must also provide minimum value in that it covers at least 60 percent of the total allowed cost of benefits that are expected to be incurred under the plan. The contributions for the employees cannot be less than 9.5 percent of the employee's salary.
Penalties for those large employers who do not offer coverage to at least 95 percent of their employees and their dependents is $2,000 per employee per year minus the first 30 employees. For those large employers who do offer coverage but it is not affordable (if the employee contribution for the year exceeds 9.5 percent of the federal poverty line for a single individual for the applicable calendar year) then the large employer could be subject to a penalty of $3000 per employee per year minus their first 30 employees. These penalties are triggered if any one of the affected employees goes to the marketplace/exchange and receives a subsidy.