Health Care Reform Matters Clients Need to Know

As discussed in my previous post, while some brokers spend their time venting about health care reform and others expend their energy ignoring it, prepared brokers are busy talking with their clients (and the clients of those other brokers) about decisions, challenges, and opportunities that need to be addressed now. that post used as an example the need to discuss the Grandfathered plan provisions with both individual and group employers. There are other pressing issues to address, too. Here’s a few more:

Dependent Children to Age 26: Most people are aware that starting September 23, 2010 all health plans will need to cover dependent children up to age 26 (and that most carriers voluntarily began offering this coverage weeks ago). But as anyone whose ever actually read an underwriting guide, it’s not quite that simple. Which is why reviewing the FAQ posted by HHS concerning coverage for “young adults” is a worthwhile expenditure of time. There’s a few interesting nuances you’ll learn. For example, the coverage is available to the member’s child regardless of that child’s marital status, financial dependence on the parents, residency, or school enrollment status.  About the only circumstances which could result in excluding the young adult dependent is where a Grandfathered plan is involved and if the child has access to other employer-based coverage – and even this exemption expires for plan years beginning on or after January 1, 2014. Significantly, dependent coverage need only be extended to the child, not to the child’s dependents. So if the 24 year old son of a covered employee is married the parent’s carrier needs only cover the son, not the daughter-in-law.

Small Business Tax Credit: Help for some small businesses in paying health insurance premiums were among the first elements of the Patient Protection and Affordable Care Act to take effect. To qualify, firms must have no more than 25 full-time equivalents (which is a way of counting employees that takes into account part-time employees). As the IRS FAQ on the small business health care tax credit explains, the full benefit of the credit is available only to firms with up to 10 full-time equivalents. It’s also worth noting that the tax credit is calculated against the actual premiums paid for the small business’ coverage or the average small group premiums in the employer’s state, whichever is less. The IRS published a table indicating the average premium by state to be used for calculating this cap in 2010.

This table is interesting for answering other questions, too. For example, which state’s small businesses pay the highest average premiums? Alaska with an employee-only rate of $6,204 and Massachusetts with a family rate of $14,138 (which is enough to make one look forward to the 2012 candidate debates should both former Governor’s Mitch Romney and Sarah Palin both run for president).

Early Retiree Reinsurance Program: Much attention has been paid to the impact of the PPACA on individual and small group health insurance, but the legislation’s impact on larger groups shouldn’t be ignored. For example, the legislation sets aside $5 billion to help employers lower the cost of covering early retirees. Providing coverage for any retirees is rare in all but the largest groups, but for those enterprises that qualify this could mean a welcome reduction in health care costs. The reimbursements can be used to reduce the sponsor’s health benefit premiums or health benefit costs, the participants premium contributions or out-of-pocket costs, or a combination of the two. Eligibility and details surrounding how the early retiree reinsurance program works is available from the Department of Health and Human Services. Most importantly, for employers who qualify for the program, the reimbursements are available for claims dating back to June 1, 2010.

There are other provisions of the health care reform legislation taking effect in 2010. We’ll discuss them in future posts. But one takeaway should already be clear: there’s a lot to talk about with your clients. And the time to be talking with them is now.