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What Are the Effects and Requirements for Employers Under Health Reform?

September 18, 2013 at 12:00 AM EDT
The health care reform law was designed to help give people without health insurance an affordable avenue to buy it. But how does it affect Americans who get their insurance through their workplace? NewsHour analyst Susan Dentzer joins Ray Suarez to help answer frequently asked questions about how companies are affected.
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JUDY WOODRUFF: Next: understanding the health care reform law.

Tonight, we are looking at the changes that start taking effect when new online insurance marketplaces known as public exchanges open next month. One big question: how employers may respond.

Just today, Walgreens announced that it will move 160,000 of its employees into a private exchange where they can choose an insurance plan, but with company subsidies. Executives cited generally rising health care costs as one reason, but said expenses associated with the new law were a factor as well. Time Warner, Sears and Trader Joe’s have announced similar moves.

That brings us to our series in which we try to answer some of your more frequently asked questions.

And to Ray Suarez.

RAY SUAREZ: The law was designed to provide coverage for many who don’t have health insurance now. But there are still many concerns and questions about what it may mean for employer-sponsored coverage and whether some businesses may change what they offer as the law takes full effect.

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The workplace is our focus tonight.

And, once again, we’re joined by NewsHour regular, analyst Susan Dentzer.

And, as you know, Susan, we have been going out into the world and basically saying to people, what questions do you still have as the final phase-in of the law begins? And we spoke to one business owner who was visiting Washington, D.C.

JIM TRIMBLE, small business wwner: My name is Jim Trimble. And this is my wife, Janet. We’re from Kentucky. And we own a small business there.

And we furnish our own health insurance, somewhere around $800 a month. And we’re just unsure how this Obamacare may affect our insurance.

RAY SUAREZ: Now, Jim buys his own insurance for he and his wife. He doesn’t provide it for his six employees. So this new law is now coming into full effect. What does it mean for Jim Trimble?

SUSAN DENTZER: If he’s only buying it for himself and his wife, it won’t mean a whole lot.

For employers to be covered — required to provide coverage under the so-called employer mandate, which, by the way, will not take effect now until 2015, you have to be a business with 50 — at least 50 employees. And so, clearly, that will not change — that will not be applicable in his case.

It is the case where that if you are a very small business and have 25 or fewer employees at an average wage of $50,000, you can apply for and receive tax credits to help buy insurance. But, again, given what he describes, that’s probably not applicable in his case.

In essence, the big change for him will be that there will be a new small business health insurance exchange in Kentucky, as in the other states, where small businesses can also go to buy coverage. And this will mean in many states that there are more options available for small businesses than ever before.

In some instances, those plans will probably be more reasonably priced, because in effect what is happening now is that we’re putting all the small business workers and many states into larger groups, in effect, of people who are going to be buying coverage on the marketplace.

RAY SUAREZ: Is Kentucky one of the states that is cooperating with the federal government in rolling out the Affordable Care Act?

SUSAN DENTZER: Kentucky is in fact running its own state-based insurance exchange, so both for the individual exchange and the so-called shop exchange, the small business exchange, those are being run by the state.

RAY SUAREZ: We have also been getting through e-mail and other forms of communication, social media, other people’s questions.

Irma Flieger from Lumberton, New Jersey, writes: “My employer found a loophole where they can drop employees from their benefits coverage. So, come January, I will be out of coverage. For me to get it on the exchange, I need to come up with at least $250 a month, which I don’t have. How am I going to get mandated health care if I don’t have extra money to get it? I don’t qualify for the subsidized price because my wife and I supposedly make too much.”

SUSAN DENTZER: Well, not knowing entirely his circumstances, it sounds as if he may be working less than a full-time job, in which this case his employer felt that it wasn’t necessary to provide coverage.

Possibly, it could be the case that his employer intends to move to something called a defined contribution plan, where eventually the employer will simply give an employee money to go to an individual insurance exchange to buy coverage. I’m not sure about the subsidies in his case. It is the case that the subsidies are available to families — say, a family of four with income up around $94,000 a year, four times the federal poverty level.

So the subsidies are rather generous in most instances. And they average for an individual about — the average subsidy will be about $5,000.

RAY SUAREZ: Stories have been hitting the news from time to time of employers changing what they provide in the wake of the law.

Are there any either incentives or disincentives for employers to change what they do when it comes to providing health care options for their workers?

SUSAN DENTZER: Well, it certainly is the case that the United States has been an outlier in the sense that we have tied so much health insurance coverage to employment or your employment status or the status of your parents or others.

So we are an outlier in that respect, and we are moving gradually to a system where people can be assured of coverage even if they’re not working. So we’re attenuating this tie to employment over time. And I think in general we expect over time more and more workers will want to be buying coverage on an exchange by themselves, will want the access to more insurance options than typically many people have through an employer.

And I think over time we will see more of the coverage move to people buying it on their own through exchanges, probably with assistance financially from their employers, as well as, of course, from the government for those with low enough incomes.

RAY SUAREZ: In a case like that Fliegers, they might have been told to buy COBRA before. Is that still going to exist in the same way for people who are losing their health care from their employer?

SUSAN DENTZER: Yes, COBRA will exist, so that if you lose a job,you will have the ability to retain your employment-based coverage for the COBRA premium.

However — this is another aspect of the law that I think for many people will represent a positive. You will have more choices if you’re unemployed in the future, because you will be able most likely to buy coverage through the marketplace and to avail yourself of subsidies if your income is low enough.

RAY SUAREZ: Susan Dentzer, thanks for making it seem so simple.

SUSAN DENTZER: Great to be with you, Ray.