On June 8, 2016, federal officials proposed changes to short-term health insurance policies as they relate to the Affordable Care Act (ACA). These changes would put restrictions on current short-term policies and close a “loophole” in ACA, according to Health and Human Services (HHS) Secretary Sylvia Burwell. While these changes may not affect your business directly, it is important to understand how they may affect your employees’ health insurance costs.
Overview: What Are the Proposed Changes?
If passed, the proposal would restrict the limit on short-term coverage to less than three months per year and would also prevent a policy-holder from renewing. This would eliminate the current short-term plans that allow coverage for a full year with an option to renew.
The purpose of this change is to merge those insured under short-term plans with regular marketplace plans in order to add healthy people to the pool. The thought process here is that healthy people will help balance out health insurance costs with those who are struggling with illness.
The opposition argues that some short-term policyholders will choose to forego health insurance rather than join the marketplace. Those that hold short-term policies typically cite the inability to pay the health insurance cost of a full marketplace plan as the reason for their choice.
Mandatory 60 Day Comment Period
By law, HHS must allow for a 60 day comment period after the announcement of the proposal in order to hear the opinion of the public. After the public comment period is over, regulators will be left to review feedback and decide upon the fate of the proposal.
Many skeptics believe that officials are concerned with the anticipated increase in health insurance costs in the 2017 enrollment year.
How You Can Assist Your Employees with their Health Insurance Costs
One way to assist your employees with health insurance costs is to offer an individual reimbursement plan. Section 105 Plans are an excellent way to offer a formal health benefit to your employees if you are unable to afford traditional health insurance costs.
Research shows that individual health insurance policies are more affordable than group health policies. If your employees are purchasing private health insurance or are enrolled in ACA, you can help supplement their health insurance costs by providing a Medical Reimbursement Plan.
If this proposal is approved, short-term health insurance policies will be more heavily restricted and could affect your employees’ health insurance costs. By offering an individual reimbursement plan, you can help cover some of their expenses without actually carrying insurance. If these changes do affect your employees, encourage them to leave feedback during the public comment period.
Will these changes affect you or your employees? What are you doing to help curb their costs? Let us know in the comments below!