Health Care Reform Is Here

 The Patient Protection and Affordable Care Act is now in effect for employers whose health care plans have renewed since September 23.  As many employers are facing renewals in the coming months, the following factors should be kept in mind:

First, determine whether your current plan will be “grandfathered.”  Plans which remain substantially the same as last year can avoid some of the new requirements.  The inevitable rate increase should be weighed against other required expenses, such as preventative services.  About half of companies have decided to forego grandfathered status in an effort to keep costs under control.  Bear in mind that even grandfathered plans must offer certain mandated benefits, such as covering children with pre-existing conditions and dependents up to age 26, and eliminating lifetime limits on coverage.

Dependent coverage expands to include adult children up to age 26, regardless of their student status, financial dependence or where they live.  Both married and unmarried children qualify for the coverage, but not dependents of an adult child.  It also applies to existing plans unless the adult child is eligible for another offer of employer-based coverage.  (Beginning in 2014 adult children can stay on their parent’s plan even if they have another offer of coverage.)  Because of the risk of abuse, many plans are conducting audits to verify dependent’s eligibility.

New plans will have to cover preventative services at no cost to the members.  Lifetime limits on coverage are now banned, though annual limits will still be permitted.  They can be no lower than $750,000 this year, then increased to $1.25 million next year and $2 million a year later before they are phased out.

Not surprisingly, many companies facing significant health care increases are deciding to pass some of those additional costs to employees.  Employees may have to decide whether to pay more for the plan they’re currently on, or switch to another (perhaps with a higher deductible) to reduce the amount they will have to pay.  Employees who may not benefit directly from many of the law’s provisions may have more trouble with the premium increases.  A free cost calculator to help employees make an informed decision between two plans is available online at www.money-zine.com/Calculators/Insurance-Calculators/Health-Care-Insurance-Cost-Calculator.

Employers are looking at other ways to reduce health care costs.  Mandating mail order for prescription drugs is one way to save.  Another popular option may be higher-deductibles for health care plan offerings with health savings accounts, so employees can contribute pre-tax money for medical expenses.  Wellness programs for employees provides another way to reduce costs.  Some employers reduce employee co-payments if they take steps to improve their health.

From The Wall Street Journal, Saturday/Sunday October 9-10 issue, pp. B7 and B10.