Health Insurance Exchange: Is It an Option for Covering Health Benefits for Your Practice?
Like most small businesses, neurology practices face an increasingly difficult choice of whether to provide health insurance benefits to their employees and how to afford that coverage.
Beginning later this year, health insurance exchanges — a key component of the Affordable Care Act (ACA) — will emerge, giving practice managers a new option to consider.
Depending on the size of their practice, some neurologists may find that the ACA provides a new financial benefit, some will find more coverage options or lower rates, and others may be subject to fines if they do not provide employer-sponsored coverage.
For that reason, all practice administrators need to understand the ACA rules regarding insurance coverage and what the exchanges offer, said Bill Henderson, administrator of The Neurology Group in Albany, NY.
“We will certainly be in that category,” said Henderson, a member of the AAN Medical Economics and Management Committee. “In fact, I would be surprised if we did not change what we are currently doing with regards to health insurance benefits for our employees simply because of the changes that are going on in the market.”
INSURANCE EXCHANGES DEFINED
While the majority of physician practices provide health benefits to their staff members, Houston-based practice consultant Owen Dahl estimates between 20 and 30 percent do not. Practices that are located near hospitals or other medical offices that provide insurance generally must offer coverage to recruit and retain workers.
With reimbursement declines, paying for coverage has become increasingly difficult for some practices. Meanwhile, figuring out whether to use high deductibles or other strategies to reduce premium increases has become a complicated and time-consuming decision.
“I definitely think it's an overwhelming burden,” Dahl said.
Health insurance exchanges are supposed to make buying insurance easier so that more people are covered. The exchanges will offer a choice of different health plans for individuals who buy insurance on their own and small businesses with fewer than 100 employees who participate through the Small Business Health Options Program (SHOP). Exchanges are responsible for certifying health plans to assure that they offer certain levels of coverage, organizing information so that consumers can easily compare their options, and allowing purchasers to buy coverage online.
Exchanges can be state agencies or not-for-profit organizations; some states may create multiple exchanges but each one will serve a specific geographic area. The exchanges will open on Oct. 1 to provide coverage that will go into effect Jan. 1, 2014. In 17 states and the District of Columbia, exchanges will be operated by the state. Seven states chose to partner with the federal government to share responsibility for the exchange; 26 states gave all responsibility to the federal government.
THE ACA PROVISIONS AND YOUR PRACTICE
The ACA provisions to increase insurance coverage will affect neurology practices in different ways, according to their size:
- Practices with fewer than 25 full-time employees are not required to provide health coverage. However, they will be able to buy insurance through the SHOP exchange. Beginning in tax year 2014, practices that have average annual wages below $50,000 and purchase coverage through an exchange may receive a tax credit of up to 50 percent of the employer's contribution toward the employee's health insurance premium.
- Practices with fewer than 50 employees are not required to provide coverage for their workers and are exempt from penalties that will apply to larger employers. However, they are not eligible for tax credits that apply to smaller practices. They may buy insurance through the SHOP exchanges, which are expected to offer rates similar to what large businesses pay.
- Practices with 50 or more full-time employees are not required to provide coverage to their employees but, beginning in 2014, they will be hit with a penalty on their tax return if at least one of their full-time employees receives a premium tax credit to purchase insurance through an exchange. A full-time employee is one who works an average of 30 or more hours per week.
DECISIONS AT HAND
Elaine C. Jones, MD, a solo practitioner in Bristol, RI, currently pays a $2,000 monthly premium for health and dental coverage for herself and her three employees. The employees do not pay any monthly premium but are responsible for a $1,500 annual deductible.
Although she has not decided how to proceed, Dr. Jones sees the insurance exchange as one way to escape annual premium increases — and give her employees the coverage that meets their needs. Her staff members range from one in her 20s to one in her 60s, and they have different insurance needs because of their stage of life — but all have the same policy.
Instead of providing a group plan, Dr. Jones could give each employee $500 a month to buy coverage via the individual exchange.
“They could pick plans that make more sense for them. If someone's on medication, they can have a plan that has better co-pays for medicines, and if someone's not on meds they can have better plans for whatever they need,” she said. “I don't think it's going to lower my cost, but it might help freeze my cost and make it a better individual plan for each of my employees.”
Meanwhile, The Neurology Group is paying nearly $5,000 a year in health insurance premiums for each of the 23 full-time employees not covered on their spouses' policy. The practice pays the full premium for its staff members, but they pay the premiums for any dependents covered through the plan.
Henderson keeps a keen eye on the benefits being offered in the market and has provided generous coverage to maintain a competitive edge. But the ability to continue doing so is being called into question. Premiums have increased significantly in the past two years as health plans have improved the coverage to comply with ACA requirements.
“Based upon the significant cuts in reimbursement that neurology is facing in 2013, it certainly has raised the issue as to whether we should change what we are paying for insurance benefits,” he said.
WHAT TO DO NOW
Step one is to learn whether the state or federal government will operate the exchange in your state. That will tell you where to look for information as details about the exchanges emerge.
Insurance companies which sell coverage through the exchange cannot deny coverage or price their premiums based on an individual's pre-existing condition, so some practices — like Dr. Jones', for example — may find that giving staff members cash to buy insurance on their own is a reasonable option. But Dahl thinks many practices should not consider that option.
“If you are in an environment where a lot of employers are competing for employees, you're going to continue to provide health insurance because you can't afford not to,” he said. “The exchange becomes an option for you to look at” as a place to buy coverage.
Meanwhile, Henderson, the practice administrator in Albany, advises managers to start educating their staff members about the changing health benefit landscape.
“They owe it to their employees to educate them about true costs of health care in general and the value of health benefits and to help them understand that there will be a growing portion of their health care costs that they will have to bear themselves,” he said.