Now that heath reform remains intact, it's official: compliance waivers on expense-incurred medical plans are set to expire on Dec. 31, 2013, which will result in millions of uninsured hourly and part-time employees looking for new avenues of health care coverage.
According to federal employment statistics, there are 35 million hourly and part-time employees in the U.S. Of those employees, Brian Robertson, executive vice president with Fringe Benefit Group, estimates about one million are enrolled in expense-incurred medical plans.
Employers must now prepare for the flood of expense-incurred plan participants who will soon be looking for new health coverage, says Robertson.
Elimination of annual dollar limits
In order to be compliant with the Patient Protection and Affordable Care Act's requirement that annual dollar limits on benefits be eliminated by 2014, Jon Duczak, vice president with The American Worker, a provider of limited benefit medical plans, expects the law to eliminate expense-incurred plans' affordability, causing them to vanish from the marketplace. "Complying would mean a tremendous rate increase," says Duczak.
As waivers expire over the next 16 months, employers will need to decide if they're going to continue to provide a part-time or a voluntary employee medical program at all. "If they're going to continue [to offer benefits] they need to ... be considering the indemnity marketplace, or option B, they no longer want to continue to offer mini-meds," says Duczak.
Tracy Watts, partner and south market leader for client solutions with Mercer's Washington office, predicts most employees who work less than 30 hours a week will be sent to the state exchanges for their benefits.
The other option
While expense-incurred plans may be going away for good, Duczak believes that fixed indemnity plans will be around after 2014 because the plans have always been intended to supplement a health program, and they comply with PPACA's bronze plan.
Robertson points out that for part-time employee plans, it's especially important that the administrative interface with an employer offering such benefits is done well. "There are unique challenges because of the amount of turnover," he says. "Things like enrollment and premium collection have to be seamless."
For employers staying in the indemnity market, Duczak insists "they have to remember if they're moving their mini-med [plan] or looking at the indemnity market there are likely only a handful of vendors that are equipped to service all types of business, whether it be small, mid or very large business," he says. "If all of these accounts are out in the market mid-2013, those vendors - no matter how good they are - will run into capacity issues in terms of being able to intake that volume of business."
