Understanding reform: Plenty of resources to navigate federal care act

Eric Sharlow, left, and Steve Foy are among several insurance firms that are helping small businesses and individuals navigate changes created by sweeping federal health care reform. Justin Sorensen/ NNY Business

Although the employer mandate portion of sweeping federal health care reform, the Affordable Care Act, was earlier this summer pushed until 2015 for businesses with 50 or more full-time employees, small businesses and individuals in the region can begin shopping for policies in their respective health care exchanges beginning Oct. 1 for plans that take effect Jan. 1.

Individual premiums are expected to be about 50 percent lower in New York state before tax credits that could make the cost even less for many individuals, per a July announcement of the exchange by Gov. Andrew M. Cuomo. Rates for the small business exchange — the Small Business Health Options Program or SHOP — have yet to be announced but are also expected to be more affordable.

What the ACA means for firms with 50 or fewer employees

Businesses with 50 or fewer full-time employees will not face penalties if they don’t offer health insurance. Either by shopping for a policy in the SHOP and receiving a tax credit or by ceasing to offer a plan and providing money for employees to buy a health plan in the individual exchange, many insurance agents and analysts believe small businesses will be able to save substantially.

Rep. William L. Owens, D-Plattsburgh, believes “the outcome is likely to be good in terms of rates and premiums” for both individuals and small businesses because the exchanges will lead to an increased number of plans which will generate competition.

“The critical piece here is that there will be more competition in the plan marketplace, which will drive down premium costs,” Mr. Owens said. “When it’s clear that premiums have been driven down, that will drive down rates.”

This effect is likely to be particularly pronounced in the north country, he said.

“Increased competition and more variation in the type of plan being offered could be very beneficial to us,” Mr. Owens said. “More plans will have an interest in being in our area.”

Statewide, about 80 percent of small businesses are expected to be eligible for tax credits if they decide to provide health insurance. Mr. Owens said he doesn’t believe that number will be substantially different in the north country — perhaps 82 percent compared to 78 percent in New York City.

He also believes that navigating exchanges will be easier for individuals and small businesses than choosing a plan, particularly since more can be done online.

Through a grant from New York City-based nonprofit Community Service Society, the Greater Watertown-North Country Chamber of Commerce is providing free help to businesses and individuals navigating the exchanges.

The chamber, which was awarded the 18-month grant in March, started counseling businesses at the beginning of April. Katrina Kapustay, small business assistance program specialist at the chamber, has already made 11 presentations to businesses and counseled 70 business owners, employees and individuals. The service can help small businesses navigate tax credits, Healthy New York, Medicaid, Medicare, public coverage options, commercial coverage options, the state’s new prior approval law, how to choose a broker and other small group products.

“I’m here to walk them through it to be as successful as they can be,” Ms. Kapustay said.

Ms. Kapustay said the SHOP will likely make finding a plan easier for small businesses because of the ease of going online to shop for policies and because different methods of billing under the SHOP will save employers time and money.

“It’s going to be of great value to people because of all the unknowns,” Lynn M. Pietroski, president and CEO of the chamber, said of the grant. “We can do group or individual sessions. If we don’t know the answers, we have the resources to at least get the answer that’s popular at that time.”

Stephen C. Foy Inc., Watertown, is advising small businesses to take a slightly different tack: consider dropping the group plan and essentially provide money for employees to buy their own plan in the individual exchange so they can take advantage of the larger individual tax credit.

Agency President Stephen C. Foy and Benefit Consultant Eric S. Sharlow are advising small businesses to consider why they offer health insurance. Many do so to attract and retain quality employees or to ensure that the owner has coverage, but a survey his agency conducted found that as many as 80 percent of small businesses do so because they feel an obligation; if they don’t, their employees won’t have access to an affordable plan because of the high cost of individual plans in New York.

“With the ACA, companies need to think about if they really need to keep their plan,” Mr. Foy said. “The obligation part is probably gone. Now there’s an opportunity for anybody on the street to go in and buy a plan in the exchange.”

Not only is the obligation gone, but in some ways the employer would be doing their employees a disservice by continuing to have a health plan because the individual won’t be able to take advantage of the tax credit, Mr. Foy said. Since small businesses won’t be penalized if they don’t provide health insurance, these businesses need to ask if they want to continue to have a health plan and why, he said.

Mr. Sharlow added that it’s important to note that the plans available in the exchange are not “state-sponsored plans” or some version of Medicaid, as many people perceive.

“They’re the same plans their employers have now,” he said.

Mr. Foy worked to develop the Freedom Plan with Kent Utsey, president of Chicago-based American Health Resources.

The Freedom Plan allows small businesses to enable employees to buy insurance independently in the exchange. Mr. Foy is marketing it locally, statewide and nationally. He said small businesses could save up to 50 percent of what they now pay for a health plan and that all small businesses should consider the option “regardless of how much” they now pay.

He believes this option is particularly attractive for north country businesses because the majority of individuals are likely to be eligible for substantial tax credits in the individual exchange, which he said “could be significantly greater than those for the employer.”

Businesses with 50 or more employers could also consider the Freedom Plan as a way to save money for a year until the employer mandate goes into effect, he said. Under SHOP, small businesses will still have to contend with rate increases, while individual plan rate increases are expected to be absorbed by the tax credit in the individual exchange, Mr. Sharlow said.

Although the Freedom Plan requires the manpower to assess employees’ household incomes, Mr. Foy said companies would likely need a navigator even if they were offering a group plan. He plans to partner with navigators in the region to advocate the Freedom Plan.

An analysis of a construction company with 33 employees Mr. Foy conducted found that nearly all of the employees were eligible for subsidies that brought their premiums to zero and that the company could cut its health care costs by roughly 44 percent.

While considering this option, all businesses should do two things to make sure they are compliant with ACA regulations, Mr. Foy said: notify employees of the exchange by Oct. 1 and ensure that they have no more than a 90-day waiting period to enroll employees in benefits.

What the ACA means for firms with 50 or more employees

The Obama administration in early July announced that requirements for businesses with 50 or more employees to provide health insurance would be delayed until 2015, citing businesses’ need for more time to comply with this portion of the law. Nationwide, about 96 percent of businesses in this category already offer health insurance. Businesses of this size that do not offer health insurance or those that do not offer health insurance that meets certain requirements will face a penalty, which will not be levied until 2015. Businesses with more than 200 employees will be required to automatically enroll employees.

To avoid the penalty, the health insurance must not require the employee to contribute more than 9.5 percent of their household income and cover at least 60 percent of covered health care expenses.

A penalty is levied based on the number of full-time employees, or $2,000 per full-time employee minus the first 30. Only full-time employees, calculated as 30 hours per week, are used to determine the penalty, but for the purpose of classifying a business as small or large (under or over 50 employees), 120 hours of part-time labor per month equals one full-time equivalent employee. Essentially, two part-time employees equate to one full-time employee.

Lindsey H. Hazelton, an attorney at Hancock Estabrook, Syracuse, said that companies should begin assessing their workforce to ensure they have a clear system in place to count full- and part-time employees so they know which side of the law they fall on.

“Even if the law changes, or the definition of full-time changes, companies are still going to need that data to see where the company fits,” Ms. Hazelton said.

Ms. Hazelton anticipates further guidelines on the definitions of full-time, as most employers do not consider 30 hours full-time, she said. She’s seen some businesses moving employees above or below the 30-hour threshold to avoid ambiguity, but said it’s too early to tell if cutting employee hours — an initial concern of critics of the ACA — will be widespread when the mandate takes effect.

“I think it takes some pressure off,” Ms. Hazelton said of the delay. “Some businesses who had started making changes and told employees they could only work 25 hours for the rest of the year have now scaled back.”

Still, she does not recommend that companies move away from 30 hours because of speculation that this threshold will change as it gets closer to when the law is implemented.

“Right now we’re telling employers not to make any drastic changes,” she said. “It was a pretty cryptic announcement. We’ve been telling companies to wait and hopefully we’re given some clarity.”

The announcement of the delay, made July 2 on the Treasury Department’s website, stated that rules on reporting employers’ policies and other guidance for insurers, self-insuring employers and other parties that provide health coverage would be made later this summer.

Ms. Hazelton said requirements on quality and affordability may also change, as the affordability test is based on household income, data most employers don’t have access to.

Businesses with 50 or more employees still need to provide employees with a notice about their policy and the availability of the individual exchange by Oct. 1, regardless of what type of coverage they offer. The notice, which can be accessed on the Department of Labor website, must inform employees about the marketplaces and exchanges and inform them that if they get insurance through the marketplace, they might lose the employer contribution to a health benefit plan.

“I think the Republicans will continue to fight for repeal, but I don’t see it going away,” she said. “As long as the individual mandate is in place, I think there will be an employer piece.”

Mr. Owens said he also believes that the mandate will take effect and will not be buried by the political wrangling that has marred many other developments since the ACA was signed into law in March 2010.

“[The delay] gives the opportunity for the plan to be better implemented,” he said. “This is not, in my view, going to have a dramatic impact on employees in companies with over 50 employees.”
He added that he doesn’t think the employer mandate will have as much impact as other pieces of the law. The percentage of companies with 50 or more employees that do not offer health insurance is about 0.2 percent.

“I think companies are going to get a lot more questions,” Ms. Hazelton said of the impact of the mandate. “Employees who weren’t concerned or didn’t have it are going to ask. It becomes a job retention issue — people are going to be more focused on finding jobs that provide health insurance as an employee benefit.”

What the ACA means for individuals

The North Country Prenatal/Perinatal Council was awarded one of 50 state In-Person Assistor/Navigator grants in mid-July. It will transition this month from providing facilitated health enrollment and community health advocacy to helping individuals in Jefferson and Lewis counties navigate the New York Health Benefit Exchange, which opens to individuals Oct. 1 via www.healthcare.gov.
AIDS Community Resources, which subcontracted with CSS, will provide similar services in all three counties.

“We’ll actually go online with them, go shopping through the exchange, to match their needs with whatever level plan they need,” said Donna Hynes, insurance programs coordinator at the council.
The council anticipates that all of its current enrollers and community health advocates will be trained as navigators by the Oct. 1 opening.

Ms. Hynes said council staff will be better positioned than many other organizations in the state because since 2000 they have been enrolling people in programs like Medicaid, Child Health Plus and Family Health Plus.

Her four navigators will travel to various clinics, hospitals and local agencies in Jefferson and Lewis counties to educate people on their options. It will also have a fifth full-time navigator in the North Country Children’s Clinic, which was awarded a separate federal grant for in-person assistance, 30 percent of which will be targeted to the homeless population.

“The key is to see people in their own communities as much as possible to increase their comfort level,” Ms. Hynes said. “Our job is to eliminate the barriers for them to apply.”

Statewide, about 90,000 are expected to become newly eligible for Medicaid under the state’s expansion of that program. Another 1.1 million are eligible for Medicaid but not enrolled. Eligibility for Family Health Plus will also be expanded. Many people who didn’t take advantage of Family Health Plus in the past because it is a Medicaid program will be more willing to take advantage of it through the exchange, Ms. Hynes anticipates.

“I think there will be people coming on board who were reluctant to do so before,” she said.

The most affordable individual policy now available in Jefferson County is $1,100 a month. Premiums for mid-level plans in the exchanges are expected to be around $300 to $500, of which most individuals will likely only pay a fraction because of “generous subsidies” for individuals with incomes up to 400 percent of the federal poverty line, Ms. Hynes said. Statewide, about 700,000 are expected to be eligible for subsides in the exchange.

In addition to those with pre-existing conditions, single, childless couples earning just enough to have not been eligible for a subsidy will also be a population significantly impacted by the exchange, according to Ms. Hynes. A couple earning $1,500 a month can’t receive either Family Health Plus or Medicaid, but will probably be fully subsidized under the exchanges. The state is getting rid of the single childless couple category, meaning that households of two qualify regardless of the composition. Couples in their early 60s who are too young for Medicare but who have medical needs and have been going without insurance are “going to be one of the most impacted groups of people,” Ms. Hynes said.

Of the four tiers of plans, Ms. Hynes said that subsidies will pay up to a mid-level plan; if an individual wants a higher-level plan, they can absorb that cost.

Ms. Hynes advised individuals to use this period to ask questions.

“It’s not as overwhelming as people may think,” she said. “We can walk them through the changes in a way they will understand, and we’ll be certified to do so.”

Leah Buletti is a staff writer for NNY magazines. Reach her at 661-2381 or lbuletti@wdt.net.