Thursday, June 13, 2013

SKINNY" Plans Avoid Penalties For Larger Groups

"SKINNY" Plans Avoid Penalties For Larger Groups

US employers will be able to largely avoid penalties under the Obama-backed health care legislation, while offering very limited plans to their workforces. An article in Monday’s Wall Street Journal notes that these bare-bones plans may lack key benefits such as hospital coverage.

The WSJ article indicates that some benefits advisers and insurance brokers are offering these limited benefit plans to large employers. While these plans would cover minimal requirements such a preventive services, they do not offer full comprehensive coverage.

Government officials admit that these ‘skinny” plans appear to qualify as acceptable minimum coverage under the health care law. Companies offering these plans would dodge $2,000 per worker penalties for not offering health coverage. Although they might face other penalties if employees opt-out of the plans and choose to purchase subsidized coverage on the insurance exchanges, these fines would be far less costly.

The ACA act requires employers with 50 or more workers to offer health care coverage or face penalties. The Department of Health and Human Services (HHS) has promoted these plans as if they would cover benefits such as mental health treatment, hospitalizations and other vital services.

The WSJ however, points to a largely undetected loophole in the rules indicating that such mandates only apply to plans sponsored by insurers that are sold to small businesses and individuals. These cover only about 30 million of the 160 million people with private insurance. This leaves 130 million people—more than 40 percent of the US population—with private insurance that is not governed by these coverage mandates.

In general, larger employers, those with more than 50 workers, will only be required to cover preventive services without a lifetime or annual cost limit. Such low-benefit plans would constitute “health coverage” at a cost to employers that could be as little as $40 to $100 a month per employee—all while avoiding the ACA’s penalties for not providing coverage.

Government health officials are not pleased with the news that employers would seize on these business-friendly loopholes in the health care law. “We wouldn’t have anticipated that there’d be demand for these types of band-aid plans in 2014,” Robert Kocher, a former White House health adviser, told the Journal. “Our expectation was that employers would offer high quality insurance.”

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