ACA deadline nears: What it means to you

The deadline for Affordable Care Act compliance is coming at the end of the year.

That means folks in the health insurance industry expect to be even more busy than usual in the next several months.

By law, any health-insurance plan that does not meet federal Affordable Care Act rules will not be allowed, starting in 2016. Major ACA coverage changes include things such as pediatric dental care, preventive care and contraceptives.

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New compliance rules originally were scheduled to go into effect in 2014 after the ACA became law in 2010. In general, the federal health-care reform program, now commonly known as “Obamacare,” charges penalties to people who do not have health insurance.

When it appeared that many individuals and small companies weren’t going to meet the 2014 compliance deadline, President Obama said individual states could choose to continue allowing non-ACA-compliant insurance plans until Dec. 31, 2015.

Colorado was one of the states that took the continuation deadline, in part to make sure uninsured residents had time to sign up for coverage through the new health-insurance exchange Connect for Health Colorado.

Now it’s time to make the transition to ACA-compliant plans, Colorado Commissioner of Insurance Marguerite Salazar said in a recent press statement.

The deadline is expected to affect insurance brokers in three key ways:

Insurance brokers continue to educate small companies.

Many “virgin group” employers that have never offered insurance coverage are coming back to find out how high their employee insurance rates might be, should they decide to sign up for group plans, said Kendra Johnson, a health-care reform specialist at Flood & Peterson Insurance Inc.’s office in Fort Collins. The company also has offices in Denver and Greeley. Employers who come in say they can’t afford to pay 100 percent of their employees’ insurance coverage but can pay a good chunk, Johnson said.

Employers Johnson talks to say they want to “do the right thing,” Johnson said.

Now that employee participation requirements have changed for many health-insurance plans, it sometimes can make more sense to offer a company plan, Johnson said.

However, it can be expensive. If, for example, only 16 people out of a company of 300 want to enroll in a company health-insurance plan, the rates probably will be really high, Johnson said.

“That puts an employer in an interesting place,” she said. “It’s a Catch-22.”

Insurance brokers continue to educate individuals.

On the other side of the coin are employees who would rather buy health insurance through Connect for Health Colorado so they can receive a federal tax subsidy for the next several years – part of the incentive system to enroll. Those employees need to check all of the rules carefully, however; if their companies offer health insurance plans, they generally can’t receive subsidies from Connect for Health Colorado, Johnson said.

Insurance companies, including local insurance broker companies, face new business models.

The ACA requires health-insurance companies to submit data about how much of their charged insurance premiums are spent on clinical services and quality improvement. If the Medical Loss Ratio, as it’s called, is not at least 80 percent for medical care, companies have to pay rebates back to their customers.

Already, the Medical Loss Ratio has meant job loss in the insurance industry, according to information from the National Association of Health Underwriters that was provided by Johnson. The industry group is lobbying to have broker commissions be exempt from the Medical Loss Ratio in the future.

The ACA compliance deadline may affect consumers in three key ways:

Higher deductibles and co-pays.

Costs have gone up for insurance companies, and they’re passing those costs on to consumers, said Kevin Cruz, a broker-partner at Sage Benefit Advisors in Fort Collins. As an example, ACA-compliant plans must include things such as preventive care, Cruz said. In addition, insurance companies now pay a fee of about 5 percent to fund Connect for Health Colorado.

In general, insurance plan costs will continue to go up steadily.

Expenses in the medical industry continue to rise, meaning a “normal increase” in premium costs this year for consumers who have individual plans, Cruz said.

Consumers who don’t buy health insurance plans will continue to pay tax penalties.

While it be stating the obvious, many consumers who now are signing up for individual plans don’t like the tax penalty, Cruz said.

Many companies and individuals have made their way to the Sage office to get help signing up in recent months. Brokers there signed up 1,500 policies in the most recent open-enrollment period, the second highest for any company in the state, Cruz said.

“The economy is booming, with tons of new companies,” Cruz said. “We can’t even keep up with all the business right now.”

State Division of Insurance regulators work backwards from the health-insurance open-enrollment period that traditionally comes in November. So they’ve just wrapped up their own busy period and already are looking to next summer, said spokesman Vince Plymell. Division employees review all insurance company plan rates in a process in which companies must justify the premiums and benefit packages in plans.

Next summer, division employees will check to make sure all insurance plans in Colorado are in compliance with the ACA, as well as with any other related state and federal laws, Plymell said.

“That’s how we spend our summer vacation period,” he said. “Before ACA, these (open-enrollment insurance policies) came in throughout the year, but now they’re grouped into one season, so that concentrates a lot of our effort.”

Carriers submit data to the Division of Insurance annually to support their proposed insurance rates. The data is meant to ensure that insurance rates are not excessive but that they’re adequate to pay claims, according to information on the Division of Insurance website.