Q&A: New health coverage rules for employers
The Obama administration on Monday announced regulations to discourage companies from scaling back their health benefits, a goal Democrats described as a top priority of the new healthcare law.
The rules may have a profound effect on the health coverage that more than 160 million Americans get from their employers.
Here is a rundown of what the regulations could mean for those who get their benefits through work:
Q. How will the new rules work?
A. The rules affect plans that were in operation when the president signed the healthcare law on March 23. Companies have an incentive to retain this “grandfather status” because it exempts them from some of the healthcare law’s new mandates. To qualify for the exemptions, however, companies will be able to make only limited changes to their plans.
Q. Will my employer be able to charge more for health benefits?
A. Employers would be able to raise premiums and still retain grandfathered status. But the rules limit how much companies could raise co-pays, deductibles and other employee contributions. Employers also could not lower their contribution to their employees’ premiums by more than 5 percentage points.
Q. Could my benefits change?
A. Employers would be able to adjust benefits, but not cut them altogether. For example, if a plan currently covers prescription drugs, it would have to continue doing so, although the list of covered prescriptions could be adjusted.
Q. What if my employer doesn’t want to meet these requirements?
A. Any company can choose to forego grandfathered status and still offer health benefits. But the company’s health plan would then be considered a new plan and would be subject to an escalating series of new mandates. Starting next year, for example, new plans will be required to cover preventive services such as cancer screenings with no co-pays or other cost sharing.
The bigger requirements start in 2014. Businesses then will have to offer plans with a minimum standard of health coverage, which will be outlined by the federal government. Grandfathered plans would not have to meet this standard.
Both new and grandfathered plans are already subject to some mandates starting next year, including a prohibition on lifetime benefit limits and a requirement to cover dependent children under 27.
Q. Will employers just drop coverage altogether because of the new rules?
A. That’s difficult to say. Large employers have an incentive to continue offering health benefits because they could face penalties in 2014 if they do not. But some business leaders believe large employers may ultimately stop providing benefits and let their employees shop for coverage in regulated insurance exchanges.
Even more small businesses are expected to lose grandfather protections. Small businesses typically change their health plans more often than large employers. Some business groups say that will actually encourage companies to drop coverage.
Starting in 2014, small businesses will be able to shop for benefits for their employees in new insurance exchanges designed to improve coverage options.
