Our PPACA Cheat-Sheet: Plan Ahead For Those Unwanted Changes

The Patient Protection and Affordable Care Act (PPACA) is a whopping 2,500 pages of healthcare reform legislation that will span out over the next eight years. While you may not understand all the new laws and regulations that come with this legislation, one thing’s for sure: both employers and employees can expect numerous health-related provisions to take effect over the next few years. Some of these will be beneficial and others won’t, which is why we’re giving you some ideas on how to prep for those unwanted changes.

Expect to See Health Insurance Rates Rise

What you need to know right now
Healthcare reform promises to put regulations and limits on insurance companies, and while it may seem like a great idea now, employers can expect the increases to start in earnest this year. The Minimum Loss Ratio (MLR) provisions just went into effect on January 1, 2011. These rules state that an insurance company can only retain 15 percent of premiums for group insurance and 20 percent of premiums for individuals for administration and profit. Any overage must be returned to the insured. The easiest way insurers can make a profit is for the entire industry to raise rates and lower benefits.

What you need to know about 2014
A levy, based on market share, will be imposed on health insurers, with exclusions for insurers that meet certain criteria. After 2014, as health insurers face increased taxes, they could choose to increase their pricing models to absorb the levy. This may be passed on to employers through higher premiums, and employers could pass along all or a portion of any increased premium to their employees.

What you need to know about 2018
Starting in 2018, insurance companies who provide insurance costing more than $10,200 for individuals or $27,500 per family must pay a non-deductible 40 percent tax on the excess cost of the premium. Some opponents of this provision have suggested that this tax should more accurately be called a “Chevrolet” tax because many plan premiums may likely exceed those limits by 2016. As a benchmark, consider that in 2009, the average median medical coverage cost for a family topped $15,000. And since 2002, many plan sponsors have experienced an increase of nearly 80 percent in health insurance premiums. Simply put, this “Cadillac” tax could be a major burden on small businesses.

So, Can This Be Avoided?

Unfortunately, group health plans pose to be as big of a burden as hiked insurance rates. Premiums will increase for employees who participate in a group health plan, and for employers, calculating the new rates will be a hassle. With group healthcare plan costs jumping an average of 6.9 percent in 2010, the biggest increase since 2004, doesn’t it make sense to just avoid group health plans altogether? Luckily, Visor has developed a solution that makes your company’s health insurance your most manageable cost, not your least.

Get to Know Our Betterfits Solution
Many people don’t know about a little-publicized change in the regulations of health insurance premiums that took effect in 2007. Under Section 125 (Cafeteria Plan) of the Internal Revenue Code, individual health insurance premiums are eligible for reimbursement, making it possible for employees to use tax-free or pre-tax income to pay medical insurance premiums. This provides employers with a way of reducing payroll taxes and helps employees with the cost of health insurance and various medical expenses. This Premium Only Plan—as it’s also known—is what paved the way for Visor Betterfits.

Group Health Plans Are a Thing of the Past
If you’re still on the fence about whether or not you want to stay with your company’s group health plan, keep this in mind: if your company has a group health plan, that same plan will cost 100 percent more in three to five years regardless of the cost reduction strategies you implement, and that was before the passage of the PPACA.

With a Visor Betterfits plan, every employer can protect the bottom line and virtually eliminate all regulatory responsibility. The employee has complete autonomy to design the coverage that best fits the individual needs of the employee.

So, is your company ready to avoid rising insurance rates and make the Betterfits switch?