Employer Provided Health Insurance Gets New Mandates in Health Care Reform
With the passage of the healthcare bill the individual and small business health insurance markets were rewritten entirely, in the hopes of offering more affordable coverage in a typically expensive medical coverage venue.
But what about the millions of Americans who get their insurance through their employer? This large population of about 160 million people has been the focus of concern for the Democratic party, who need to find a way for them to keep their insurance even as federal mandates come into effect mandating costs and coverage.
In an effort to protect large employer provided health insurance plans a new set of rules were released this week for the medical coverage plans that will be considered “grandfathered in” to this new insurance market.
An insurance plan is said to be “grandfathered in” if it is exempt from the mandates that came with the healthcare bill. Employers who continue to offer these plans will also be exempt from the new mandates, and from the fines that come with it for not offering coverage or for not offering a minimum of covered services.
Retirement health insurance plans, for example, will be completely exempt from the new healthcare bill mandates.
However, there is a catch for large employers offering insurance to their current workforce: the plans can only be considered “grandfathered in” if they aren’t changed significantly.
For example, while employers will be allowed to raise the premiums paid by their employees, they won’t be able to raise co-pays beyond $5 or 15% plus the rate of medical inflation. And, employers won’t be able to lower their own contributions to their employees’ premiums by more than 5%.
And what about benefits? While employers won’t be allowed to completely cut them from their health insurance, they will be able to modify them. For example, health insurance plans offered by large companies or employers that cover prescription drugs must continue to do so, though they can change the list of drugs covered if they want to.
Larger companies who change their insurance plans beyond these guidelines will no longer be able to call them “grandfathered in” and will therefore be subject to the healthcare bill mandates in 2014 that require a minimum of coverage at controlled costs.
By creating this more flexible set of rules for employer provided health insurance the White House hopes that larger companies that already offer medical coverage will be incentivized to continue doing so.
Opponents of the bill argue that when it becomes cheaper for companies to pay fines for not offering coverage than to offer the coverage, employees will lose their insurance.
Supporters of the bill say that larger companies will save money by continuing to offer coverage based on these special rules, and that individuals who aren’t offered insurance by their employers will be able to get more affordable coverage from state-run insurance exchanges due to be up and running by 2014.
What will be covered by these insurance plans – whether they come from employers or the insurance exchanges – still isn’t 100% clear. Preventative services are mandated for the insurance to be offered from exchanges, along with many prescription drugs, but since employers’ current plans will be exempt from the new bill, there’s no way to compare coverage until 2014.
