Q. I already have great employer-sponsored health insurance that covers my pre-existing conditions. So how does Obamacare help me? It seems like the only thing the ACA is doing is making my employer jump through more hoops, and making my coverage more expensive.
A: There are several ways that the ACA protects you as a member of an employer group plan.
Large-group plans (mostly self-insured) make up about two-thirds of the group market. Commercially insured (as opposed to self-insured) large-group plans are required to be guaranteed issue under the ACA, which was not previously the case. Small-group plans account for the other third. (About 18 million people in 2012 were insured on group plans with fewer than 50 employees).
HIPAA made small-group plans guaranteed issue nearly two decades ago, but did not set rules regarding the pricing of those plans. States were allowed to implement their own regulations for how group plans could be priced, and many states did not require modified community rating in the small-group market prior to the ACA.
This meant small-group plans could be much more expensive for businesses with sick employees. Thanks to the ACA, premiums in the small-group market are no longer based on gender, medical history, or a small group’s claims history, and older enrollees can not be charged more than three times the rate for younger enrollees.
- Employers with 50 or more full-time equivalent employees have to offer at least minimum value coverage and make it affordable. Employees can’t be required to pay more than 9.66 percent of their income for employee-only health insurance in 2016 (increasing to 9.69 percent in 2017), and employers face financial penalties for non-compliance.
The medical loss ratio (MLR) provision in the ACA impacts about 75 million Americans – including those with group health insurance coverage. It’s already been in place for four years, and requires health insurance carriers to spend at least 80 percent of premiums on healthcare; administrative costs cannot exceed 20 percent of premiums.
In the large-group market, at least 85 percent of premiums must be spent on healthcare. Large groups are defined as having more than 50 employees, although some states have opted to include groups with 51-100 employees in the small group category.
Employers that spend too much on administrative expenses must rebate the excess to their enrollees. From 2012 through 2015, those rebates totalled $2.4 billion.
- The ACA imposed caps on out-of-pocket exposure, and eliminated annual and lifetime coverage limits in both the individual and group markets, benefiting an estimated 105 million.
- The ACA provides two years of tax credits to offset the cost of coverage for small businesses with 25 or fewer workers and average wages less than $50,000, as long as they buy a plan through the SHOP exchange.
- Pre-existing condition waiting periods have also been eliminated from employer-sponsored health insurance plans. As Julie Rovner explains in this NPR piece, the provision was phased in during 2014; it took effect at each plan’s renewal date that year. Employers can still have waiting periods of up to three months before they offer health insurance to new full-time (30+ hours/week) permanent employees. But once the coverage takes effect, it will not have a waiting period for pre-existing conditions, regardless of whether the new employee had creditable coverage prior to joining the employer’s plan.