Employers Eye Bare-Bones Health Plans Under New Law

[Moosepoop]

37. Yes, the WSJ is full of shit.

http://www.jonesday.com/affordable_care_act/

The Affordable Care Act at 2½—What Employers Should Expect Now
August 2012


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III. THE MANDATES FOR LARGE EMPLOYERS

A. "Play or Pay" Mandate

Effective January 1, 2014, the ACA will generally require all employers who employed an average of at least 50 "full-time equivalent" employees during the prior calendar year (which the ACA defines for this purpose as a "Large Employer&quot to either offer health insurance coverage constituting "minimum essential coverage" to full-time employees and their dependents[8] or potentially be subject to a tax equal to $2,000 annually ($166.67 per month) for each full-time employee of the employer in excess of 30 employees. (Code § 4980H(a), (c)(1)). For these purposes, an employer is defined by the controlled group rules of Code section 414. The term "minimum essential coverage" does not require the employer to provide certain types of coverage or maintain certain cost-sharing limits, such as would apply to an "essential health benefits" plan eligible for certification by an Exchange as a "qualified health plan." Minimum essential coverage merely needs to be a group health plan (as defined in Section IV.A.1. below) offered by an employer. (Code § 5000A(f) (defining "minimum essential coverage&quot ). That being said, there are numerous requirements that independently apply to such coverage. The ones added by the ACA are described in Section IV below.

IV. HEALTH BENEFIT-RELATED MANDATES

The ACA imposes a variety of requirements on both "group health plans" and "health insurance issuers." These new requirements include rules governing who must be afforded coverage by such plans and insurers, what types of services must be covered, cost-sharing rules governing such coverage, and what coverage limitations can be imposed. Some of the new requirements build on an existing regulatory scheme first established under HIPAA. Others are added separately. The various requirements apply to different health coverages and have different penalties. Below is a discussion of the rules for certain of the requirements, which are mandates added by the ACA to the HIPAA scheme (herein, the "ACA Coverage Mandates&quot , followed by a list of the various requirements in chronological order by effective date.

A. ACA Coverage Mandates

The HIPAA regulatory scheme is found in the Public Health Service Act ("PHSA&quot , ERISA, and the Code. Some of the new requirements are added to the PHSA and are incorporated into ERISA and the Code by reference through ERISA section 715 and Code section 9815. It is important to understand the forms of employer-provided arrangements to which these mandates apply.

1. Health Benefits Subject to the ACA Coverage Mandates

The term "group health plan" is not defined in the ACA, but it is defined under the earlier HIPAA rules that are incorporated in ERISA, the Code, and the PHSA, and accordingly such definition will govern for ACA purposes. A group health plan is defined to mean "an employee welfare benefit plan … to the extent that the plan provides medical care … to employees or their dependents … directly or through insurance, reimbursement or otherwise." (PHSA § 2791(a)). An employee welfare benefit plan, in turn, means an insured or self-insured health arrangement sponsored or maintained by an employer or union (or both) for employees. (ERISA § 3(1). As such, by imposing new requirements on "group health plans," the ACA effectively imposes them on virtually all employer-provided health benefit arrangements for employees. Furthermore, the term "health insurance issuer" is defined to mean an "insurance company, insurance service, or insurance organization … licensed to engage in the business of insurance in a State and which is subject to State law …." (PHSA § 2791(b)). Thus, the ACA, by also imposing its coverage mandates on health insurance issuers, has effectively imposed mandates on virtually all individual and group insurance market policies.

There may be insurance brokers peddling the cheap, worthless policies to large employers, but if the large employers buy those policies instead of the ones they're required to offer their employees they're going to wind up in a mess, and probably the brokers will, too. It would serve them all right.