The stated purpose of the Patient Protection and Affordable Care Act (aka. ObamaCare) is to provide affordable health insurance to everyone. In fact, the program actually penalizes anyone who does not pay for coverage. The largest victims, however, are businesses who fund their own insurance program in order to keep it cost-effective.
Assessment for Employers who Self-Fund
The escalating price of healthcare has forced many small and mid-sized companies to turn toward self-funding options to provide benefits to employees. These businesses are now going to lose potentially billions as Obamacare, gets under way. Many feel these programs benefit the insurers more than business or consumers.
One provision involves an assessment on employers meant to offset the cost of insuring those who have found it difficult to get health coverage. The change does not benefit employees in general, only high-risk individuals. The first installment will cost large employers, designated as a business with over 100,000 employees, millions of dollars.
Effect on Insurance Companies
Insurance companies will also shoulder some of this burden. They face a similar assessment. The government is offsetting their financial cost by returning as much as 25 billion dollars to them. No such rebate has been announced for businesses. The plan is to take from the businesses during 2014 to 2016 and then pay some of that money back to health insurers.
For self-funded companies, there is no direct benefit. This is not an incentive to offer health insurance coverage to employees since these companies already supply health insurance.
How Will the Assessment Work?
The exact details of the assessment are in the development stage. At this point, it appears that businesses will pay somewhere between 70 to 90 dollars per participant in the plan. A company that supplies 100,000 plans could be out as much as $900,000 dollars.
The exact cost and per-capita fee will be released this fall. The U.S. Department of Health and Human Services is in charge of developing the restrictions and assessment stipulations. The Patient Protection and Affordable Care Act establishes this agency to regulate the assessments.
One detail that remains unclear is how the numbers will be determined. Obviously, allowing companies to report how many plans they cover will not work. The agency will need to develop an auditing system to regulate the process. The number of employees that take part in a group coverage program varies every year for each company.
Another issue is the size of the company. Businesses need to plan for when this assessment will affect them. The first year is only large companies, however, down the road that will change. No one is exempt from the assessment at this point. Fully funded companies will not see it, however. It falls under the responsibility of the insurers.
Fully Funded Companies
It is not all peachy for fully funded companies either. Obamacare gets them too with medical loss ratio requirements that could drive up their cost for group plans. Many of them may opt to self-fund to compensate. Switching to a fully funded program if you are currently self-finding is not an answer either. The price tag on self-funded health insurance is still less , even with the new assessments in place.
The program starts for large businesses in 2014. Assessment fees will be due quarterly. Companies who opt for self-funding will submit their payments to third-party administrators, who will pay the government.