Don't stop preparing just because you heard "delay"

We've heard the word "delay" several times since we've heard the word "passed" in relation to the Patient Protection and Affordable Care Act (PPACA), sometimes called 'Obamacare'.

First, there was the delay of Medicare cuts until after the election. Then there was the delay of the Employer Mandate, which required businesses of 50 or more full-time equivalent employees to offer affordable health insurance or pay a penalty. Penalties for non-compliance have been delayed until 2015. Then there was an announcement, buried in the Federal Register, that the administration would delay enforcement of several key pieces of eligibility for another year, relying on the good, old fashioned honor system for individuals to report their income and base tax subsidies on that. And most recently, the caps on out-of-pocket insurance costs have been delayed for one more year (now starting in 2015). By limiting the "worst case scenario" amount that you'll pay out-of-pocket in health expenses each year, which would likely cause many premiums to increase.

Don't stop preparing just because you heard "delay"

Many people think that the entire law has been delayed, but it's only the specific parts listed above. 

The individual requirement to have health insurance will start on-time on January 1, 2014 - along with other key changes to individual and family policies. You can qualify for tax subsidies based on income to help reduce monthly insurance premiums and out-of-pocket expenses like deductibles and copays. You cannot be turned down or charged extra for pre-existing conditions, health history, gender, or how often you use your plan. Pre-existing conditions and pregnancy are always covered. Your children can be insured on your health plan until they are age 26. You can shop in exchanges to help reduce your costs and choose from a Platinum, Gold, Silver, or Bronze (some will have a 5th "catastrophic" plan option) sold by private insurance companies competing for your business. 

Changes that affect Small Businesses will also begin in 2014. PPACA defines a Small Business as one with at least two but less than 50 full-time equivalent employees. If you are Self-Employed (business of one), then you are not considered an "employer" under PPACA and can use the exchange to shop for low-cost individual and family policies. Insurance companies cannot charge Small Businesses more based on size, gender, health conditions within the group, pre-exisiting conditions, claims, or profession. Insurance companies also have to account for where all the premiums dollars go with limits on how much they can keep for administration and overhead costs and profit. Small Businesses are not required to offer health insurance to its employees, but might qualify for a tax credit if they do. 

Why were parts of the law delayed?

The reason for many of the delays in the law are associated with cost. When all plans have to limit what an individual can pay in out-of-pocket costs each year ($6,250 for an individual - includes copays, deductibles, etc.) and limit the deductible on health plans (can't exceed $2,000 for an individual or $4,000 for a family), then we will see an increase in what many people pay for insurance. As we know, there is no such thing as free lunch, so when benefits on health plans get better, the prices will get higher. This delay will give us all time to adjust to the new rating system before making additional changes that could increase insurance rates.

According to a study released by the Obama Administration, over half of Large Businesses (50 or more full-time employees) were not prepared for PPACA changes, and that is why the Employer Mandate was delayed. The Employer Mandate requires Large Businesses to offer health insurance to their employees or pay a penalty ($2,000 per employee per year with a wavier for the first 30 employees). The plan also has to pass an Affordability Test for all employees. If it is deemed unaffordable for at least one employee who tries to use a tax subsidy to qualify for reduced premiums in the individual exchange, then the employer would be charged a penalty of $3,000 per employee per year for non-compliance.  

So what should I do now?

Keep moving ahead. Don't stop preparing your Large Business for PPACA changes just because you have another year before the penalties begin. Use the next year to partner with a private exchange who will make sure that your plans are PPACA compliant, you are doing all the required calculations and reporting, and your plan passed the Affordability Test. Do this in 2014 so you are ready for 2015... penalty-free.