On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act (ACA), which aims to eliminate inefficiencies in our current healthcare system and extend coverage by providing affordable care to uninsured Americans. Small private medical practices (less than 50 employees) are planning ahead for the effects these changes will have on their practices. Since federal agencies are continuing to develop new rules and guidance, practices should consult with legal counsel for a comprehensive explanation of the ACA and how various regulations will apply to them.
As the owner of a small private medical practice, you should know which provisions taking effect January 1, 2014 may affect the health insurance plan currently offered to your staff., including:
Small private medical practices (1–49 employees) are NOT subject to the employer mandate or financial penalties.
Essential Health Benefits
Any plans sold or renewed in the small group market (except grandfathered plans that are renewed by December 1, 2013) will include new benefit requirements known as Essential Health Benefits (EHBs). Many existing medical plans currently include these benefits, but annual and lifetime dollar limits have been removed. The EHBs are:
o Emergency Services
o Laboratory services
o Maternity and newborn care
o Mental and behavioral health and substance use disorder services
o Prescription drug coverage
o Rehabilitative and habilitative services and devices
o Prevention, wellness, and chronic disease management services
o Pediatric dental and vision coverage
o Outpatient or ambulatory care
ACA Premium Rating Methodology
Small private medical practice rates in Maryland are currently based on the average age of the employees enrolled in the plan. Going forward, group rates will be the sum of individual rates for each enrolled individual based on their age.
Rating will no longer be based on enrollment tiers of Employee, Employee + Spouse, Employee and Child, and Family. ACA-compliant plan premiums will be calculated based on the age of the employee, his/her spouse and each dependent (when applicable). For family plans, rates will include the employee, his/her spouse, the oldest three children under age 21 and all adult children ages 21 to 26.
The ACA also introduces new fees, taxes and assessments that may add to the cost of health insurance plans, including:
· Federally Facilitated or State Exchange User Fees – in Maryland, state funding will cover this fee in 2014.
· Transitional Reinsurance Program – All plans in Maryland will be charged a $5.25 PMPM (per member per month) fee.
· Patient-Centered Outcomes Research Institute Fee – Commercial health insurers and employer-sponsored health plans will be assessed an annual fee to fund patient-centered outcomes research. This fee, which will be imposed for a limited number of years, is:
o $1 per covered life for the plan and policy years ending after September 30, 2012 and before October 1, 2014
o $2 per covered life for the plan and policy years ending after September 30, 2013 and before October 1, 2014
Risk Adjustment Fee – All non-grandfathered small group plans will be charged this fee, estimated at $1 for each covered life per year.
Additional fees will be applied, but the amounts have not yet been determined by the federal government:
· Health Insurer Fee – All plans in Maryland will be charged this fee, estimated at 2% to 3% of the premium.
· QHP Certification Fees for Small Business Health Option Program (SHOP) – All plans in Maryland will be charged this fee if purchasing a plan on the SHOP Exchange.
Medicare Payroll Tax for Higher-Compensated Staff
Currently, all employees pay a 2.9% Medicare tax. According to the IRS:
· An employer must withhold an additional Medicare hospital insurance tax (0.9%) from wages it pays to an individual in excess of $200,000 in a calendar year without regard to the individual’s filing status or wages paid by another employer.
· An individual is liable for additional Medicare taxes if the wages, compensation or self-employment income exceed the threshold amount for the individual’s filing status:
o Married filing jointly threshold — $250,000
o Single threshold — $200,000
Take action now to ensure that you are prepared for the health insurance changes coming in January 2014
Christopher M. Rutzebeck is the benefits manager at Human Resources inc. He can be reached at email@example.com.