The Affordable Care Act Could Change Your Employer’s Health Coverage
When the Affordable Care Act takes effect on January 1, 2014, there are going to be significant changes to the American health care landscape. Some of those changes have already taken shape, such as new laws prohibiting the denial of coverage to people with pre-existing conditions, but the majority of new rules will kick in at the beginning of the year.
One area that’s likely to see some of the most dramatic changes is employer-sponsored health insurance. For decades, millions of Americans have received health insurance through their employer. In most cases, employers pay a portion of the premium with their employees picking up the rest through payroll deductions. However, with new requirements relating to what constitutes adequate coverage, shifts in how costs are covered and rules regarding which employers are required to provide coverage, many employers are reexamining the benefits they offer employees — and some are making changes.
While every employer is different, and some people won’t see any difference in their health coverage at all, others may see some of the following changes to their employer-sponsored medical benefits.
A Greater Emphasis on Wellness
One of the major provisions of the Affordable Care Act is a greater emphasis on employee wellness with the understanding that if employees can receive the support necessary to lead healthier lifestyles, their health care costs will decrease. The act includes grant programs to help fund wellness programs at small businesses, CDC support programs for businesses that need help developing and maintaining wellness programs, and subsidies that allow employers to offer larger discounts on health insurance premiums to employees who enroll in wellness programs. The underlying idea is that healthy employees cost less; expect to see even businesses that aren’t changing their coverage options begin offering more programs to help their people quit smoking, lose weight and manage chronic conditions.
Discontinued Coverage
One of the reasons employer-sponsored coverage has been so popular is that many employers allow their employees to purchase insurance for their families as well. However, under the Affordable Care Act, there’s a chance that some employers could end coverage for employee spouses. Because the new law requires everyone to have health insurance and will create exchanges that allow individuals to purchase their insurance (and tax credits to help offset the cost), employers may decide to trim their costs by forcing employee spouses to purchase their coverage elsewhere.
Payment Changes
Employee spouses may not be the only people asked to purchase health insurance, thanks to the opening of the health insurance exchanges. In some cases, employees themselves may no longer pay for their coverage via their employers, but instead receive a cash payment to be used to purchase insurance elsewhere. Instead of offering group insurance and having all employees pooled together to determine premiums, employers would offer the same subsidy to everyone. This could reduce costs for employers because of instead of having to contribute more to cover older or sicker employees, those employees would have to bear more of the burden themselves. However, government tax credits and private prescription discount cards like the Afford RX Discount Card will help reduce those expenses.
No Health Benefits
One of the unintended consequences of the Affordable Care Act, according to some, is that some small businesses and even some larger companies may stop offering health benefits entirely to employees. The law states that any business with more than 50 employees must offer some type of health care benefit to full-time workers. To contain costs, some employers could change their employee structure by changing employee’s employment status to part-time — or even reducing their workforces. This portion of the law will not take effect until 2015, but some employees of smaller companies could potentially lose their employer-sponsored health care coverage entirely and be forced to purchase it on their own to comply with the law.
Because the Affordable Care Act has not fully taken effect yet, and because the specifics are still being ironed out, all of these changes are still in the hypothetical stage. However, one thing is for certain: Thanks to legislative reform, the face of health care in the U.S. will change drastically in the coming years.
About the Author: Meredith Stanger covers personal finance and insurance topics for several financial websites.
