Tuesday, June 19, 2012

Fewer Choices, Higher Costs: ObamneyCare©

Starting a new business is challenging enough, but navigating the maze of group insurance adds a whole new dimension. A frequent roadblock is the issue-and-participation requirement. This is a carrier rule based on the number of employees and how many opt for the group plan. Carriers justify this based on the concept of adverse selection (only sick people would sign up).

I recently met with the owners of a new company, and we quickly established that they'd be ineligible for a group plan based on participation requirements. Looking for alternatives, we wondered if a "stand-alone" Health Reimbursement Arrangement (HRA) would do the trick.

A stand-alone HRA is basically a health care debit card funded by the employer. A typical design might be $500 per year per employee; the first $500 of one's medical expenses would essentially be borne by the employer. Unlike a qualified Health Savings Account (HSA), there was no requirement for an underlying health insurance plan.

We thought this would be a great option in this case: it would mean that at least some of an employee's medical expenses could be shifted off his or her shoulders.

Alas, ObamneyCare© has ruled this out:

"Health care reform requires most group health plans to provide minimum annual levels of coverage for “essential health benefits”  ... In 2014 group health plans will have to provide unlimited annual benefits for “essential health benefits” ... The government has ruled that most HRAs are considered group health plans for these purposes."

In other words, stand-alone plans would themselves have to be "unlimited," a rather daunting prospect for any business. Needless to say, this plan was a no-go.

So of course we can see how ObamneyCare© has increased choices and lowered costs across the board.

Or not.

[Hat Tip: FoIB Alissa C]
blog comments powered by Disqus