While Canadian plan sponsors are more likely to be subsidiaries of American companies, there are many Canadian companies with subsidiaries in the United States. For those that manage U.S. benefits programs from their Canadian head office, U.S. medical benefits can be more than a bit intimidating.
Beyond the initial sticker shock of U.S. group medical plan costs that can be up to 1,000% higher than their Canadian counterparts, there’s a venerable minefield of rules and regulations, which are largely non-existent in Canada. And if this wasn’t enough to contend with, U.S. President Barack Obama made life even more complex for plan sponsors, insurers and advisors.
The Patient Protection and Affordable Care Act, which is often shortened to the Affordable Care Act (ACA) and also commonly referred to as healthcare reform or Obamacare, has significantly changed health policy in the United States. Healthcare reform includes numerous requirements with two main goals, to improve access to healthcare and make coverage more affordable.
The vast majority of legislated changes required by healthcare reform are already in place. For example, pre-existing condition exclusions are no longer allowed and children up to age 26 can still be covered under their parents’ plan, even if the child is married or eligible to join their employer’s plan. Healthcare reform also requires employer-provided group health plans and insurers to meet specific standards, which has eliminated such things as excessive benefits waiting periods and imposed limits on out-of-pocket maximums.
A key piece of the legislation was just recently implemented on Jan. 1, 2014, and requires all individuals to have health insurance. Individuals without healthcare coverage through an employer-sponsored plan (Medicaid, Medicare, etc.) must have “Minimum Essential Coverage” or be subject to tax penalties.
Over the next few years, employers with 50 or more full-time employees will be required to offer “affordable coverage” that meets specific minimum requirements. Companies that don’t meet these obligations will face financial penalties. Some transition relief was just announced in February on the timeline for compliance with these requirements, which will depend on the number of American employees you have. The changes are as follows:
Employers with 100 or more full-time employees — These large employers must offer coverage to 70% of their full-time employees in the first plan year commencing on or after Jan. 1, 2015, and 95% in 2016 and beyond.
Employers with 50 to 99 full-time employees — Mid-sized employers must offer coverage to all full-time employees commencing with the first plan year in 2016. These employers will also need to certify they are not reducing their workforce solely to remain below the 100+ employee requirements.
Employers with less than 50 full-time employees — If you are an employer with fewer than 50 full-time employees, there is no requirement to offer health insurance to your employees. However, all companies regardless of size are required to notify their employees about the health insurance marketplaces (healthcare.gov being one of them) where consumers can compare plans and purchase coverage.
Requirements for all employers providing coverage — All companies providing healthcare, including those with fewer than 50 employees who choose to provide coverage, must meet certain minimum standards. Whether you already have coverage in place for your U.S. employees or you are just breaking into the U.S. market, all group medical coverage must include the following key healthcare reform requirements that have come into effect over the past four years:
- waiting periods for job-based coverage cannot be longer than 90 days;
- pre-existing condition exclusions are not allowed.
- dependent coverage for children must be made available until the child reaches age 26, regardless of the child’s employment, income level, ability to self-support, student status, or marital status;
- out-of-pocket limits can’t be more than the limits for health savings account-compatible high-deductible health plans; these limits are indexed annual and are $6,350 (individual coverage) and $12,700 (family coverage) in 2014; and
- annual deductibles (small group market) cannot exceed $2,000 (individual coverage) and $4,000 (family coverage) on insured health plans.
Non-grandfathered plans must also comply with the following:
- preventive health services must be covered with no cost sharing (no co-pays, co-insurance, etc.); and
- emergency medical plans cannot require pre-authorization for emergency care; deny coverage because the facility is outside the network; impose limits on coverage received at an out-of-network facility that are more restrictive than they are at an in-network facility; or require the patient to pay more than is allowable under cost-sharing rules.
While the above list outlines some of the major U.S. healthcare reform requirements, it is not exhaustive. This piece is legislation is very complex. Even Nancy Pelosi, the then-speaker of the House of Representatives said in 2010 that “we have to pass the bill so that you can find out what is in it.”
Plan sponsors with U.S. employees that are trying to understand their new obligations under the ACA should be aware that the devil is in the details. Certain requirements may vary by state, or apply only under specific circumstances.
Even the so-called experts have had difficulty interpreting the minutiae of this legislation so plan sponsors would be wise to seek out a second opinion where the rules are not clear. Lastly, elements of healthcare reform that have not yet come into effect are by no means written in stone as the Obama administration has a history of making last-minute changes to how and when key pieces of this legislation are implemented.