Small business owners are concerned that due to the health care reform, the health insurance plans most small businesses currently use will no longer be offered once there is a transition to the new system.
The Obama Administration believes it can remedy this issue. The White House has assured everyone that they will be able to keep their current plans, though they may wish to transition to new plans with greater protections. In the meantime, the administration is currently looking into exemptions for some small business insurance plans.
According a a summary released by the U.S. Department of Health & Human Services:
The rule announced today preserves the ability of the American people to keep their current plan if they like it, while providing new benefits, by minimizing market disruption and putting us on a glide path toward the competitive, patient-centered market of the future. While it requires all health plans to provide important new benefits to consumers, it allows plans that existed on March 23, 2010 to ... make routine changes without losing grandfather status.
However, if plans make significant changes, they will lose their grandfathered status and will no longer fall under the exemption. Just what constitutes a significant change may be confusing and at times misleading. As the New York Times, "You're the Boss" Blog notes, a plan would be considered to have undergone "significant changes," if it increases by "medical inflation plus 15 percentage points." But they would not be in jeopardy if they make "routine changes," including cost increases to deductibles and co-payments, so long as they are not "significant."
Sound confusing? You're not alone.
Generally speaking, the government predicts that most small business employees will end up transiting to new plans instead of old grandfathered plans, and rather quickly. The Times cites figures of 70% of plans being grandfathered in 2011, but as few as 20% by 2013, an incredibly steep decline.
Instead of being alarmed, the Obama Administration contends that employees should be pleased with the changes, as they will have greater patient protections. However, it is likely that the cost of the plans will also go up, for employers and employees.
How it all plays out remains to be seen. One thing that you can count on: as the health care story continues to develop, we will continue to blog.
- Small Firms May Not Keep Current Health Plans After White House Decision (New York Times Blog)
- Fact Sheet: Keeping the Health Plan You Have: The Affordable Care Act and "Grandfathered" Health Plans (HealthReform.gov)
- U.S. Departments of Health and Human Services, Labor, and Treasury Issue Regulation on "Grandfathered" Health Plans under the Affordable Care Act (U.S. Department of Health and Human Services)
- President Obama Signs Health Care Bill into Law (FindLaw's Law and Daily Life)