The closer we get to the implementation of the new healthcare law, the more problems seem to pop up.
The latest problems? First, employers have been caught by surprise thanks to a fee under the Affordable Care Act that charges employers $63 per insured employee in 2014.
Second, big health insurers are warning Americans that their premiums could rise anywhere from 20% to 100%, due also to the new healthcare law. Mark Bertolini, CEO of Aetna Inc., told AP the price hikes are “premium rate shock.”
Employers passing it on to the employees
Several large companies, including Boeing Co., Chrysler, Ford and General Motors, are speaking out against the $63 fee, according to the Wall Street Journal, and pleading with federal regulators to exclude their employees as the fees would be exponential. Boeing, for example, already spends $2.5 billion annually on health insurance benefits and would expect to pay $25 million in fees.
The fee will apply to employers that assume the risk for workers’ medical bills, and many private plans sold by insurers. The fee will be smaller for 2015 and 2016, but regulators haven’t set those amounts.
Insurance companies say the fee is essential to prevent rates from shooting through the roof when they are forced to insure those with pre-existing conditions.
Benefits experts are predicting that employers will pass on at least a partial amount of the fee to employees or work with their plan sponsors to cut back on benefits.
Prepare for premium sticker shock
But even though insurance companies are hoping the $63 per employee fee will offset large premium hikes, it appears it may not help much for some insured Americans. Next January, premiums are set to increase.
The biggest premium price hikes are expected to hit a group representing a relatively small portion of the insured population, including some of the 14 million who buy their own insurance rather than being covered under employer plans.
Twenty-somethings can also expect to take the brunt of the hit, as well as those with Medicare Advantage policies, privately-run versions of the government’s Medicare program for the elderly and disabled.
Some positives, too
Though the picture looks grim for 2014, there are still some silver linings. For instance, tax credits will be granted to people with incomes falling within 400% of the federal poverty level. According to the Associated Press, 400% of the poverty level for all states except Alaska and Hawaii in 2013 would be $94,200.
The credits won’t lower premiums, but they can ease the insurance bill, which will be especially help younger employees who may have lower incomes.
Though these changes won’t take effect until 2014, it’s worth opening up the lines of communication with your employees now and prepare them for what could be an expensive 2014 – at least when it comes to staying healthy.
