The Rising Cost of Healthcare for a Family of Four
Written by Don Canada, Silicon Benefits

Regardless of party affiliation, the high cost of healthcare is a great concern for many Americans who have watched their health insurance premiums double since 2013.  A recent study found the cost of healthcare for a typical American family of four, covered by an average employer-sponsored preferred provider organization (PPO) plan, is $28,166 annually.

U.S. healthcare is close to 18% of GDP!  In Fort Worth, small to mid-size businesses have hit a “ceiling of complexity” with the astronomical cost of providing health insurance to employees and/or their families.  A short-term strategy leveraged by many employers has been to “shift” the increase in financial responsibility to the employees in the form of higher premiums and/or out- of-pocket exposure to the employee and/or their dependents.  For most employers, Employee Benefits typically make up a 1/3 of the bottom line.  Employers, employees and families are in a difficult position to find the word “affordable” in the Affordable Care Act.  

On October 12, 2017 President Trump issued Executive Order 13813 - Promoting Healthcare Choice and Competition Across the United States.  On June 22, 2018 the DOL issued a final ruling aimed at lowering health insurance cost.  The order focuses on expanding the availability of three types of health coverage arrangements:

1.  Association Health Plans (AHP)

2.  Short-Term and Limited Duration (STLDI)

3.  Healthcare Reimbursement Accounts (HRA)

 Association Health Plans (AHP)

The ruling by the Department of Labor (DOL) will make it easier for small businesses to band together to buy health insurance across state lines without the regulatory requirements of the ACA.  An association can be formed for the sole purpose of offering an association health plan to its members.  The Congressional Budget Office predicts 4 million people will enroll in AHPs impacting individuals, sole proprietors, small employers, employees and their families.

Short Term Limited Duration Insurance (STLDI)

Short Term Medical plans have been around for decades, but were deemed non-compliant by the ACA since the product did not meet the ACA definition of essential benefits, had limitations, and did not provide coverage for pre-existing conditions. With the recent changes, Short Term Medical insurance can be purchased for up to 360 days and is a consideration for many healthy individuals who are no longer willing to bear the cost of a permanent coverage either for them and/or their dependents.   

Healthcare Reimbursement Arrangements (HRA)

HRAs traditionally were utilized to reimburse employees for “unreimbursed medical, dental and vision benefits.”  The restrictions have been relaxed on HRAs allowing employers to “reimburse premiums” on a tax-advantaged basis.  Small employers may consider offering an HRA, in lieu of offering a group health plan, to protect the company from volatile increase and uncertainty in the future. However, in this scenario, the employees bear the risk of rising premiums and a volatile individual health insurance marketplace. 

Is the final ruling final?  The opposition contends the arrangements are a way to work around the ACA requirement requiring plans cover essential benefits. A coalition of 12 States have filed a lawsuit challenging the DOL ruling that allows healthcare plans to sidestep protections set up by the ACA.  The IRS has issued a Frequently Asked Questions (FAQ) with open comment, on whether the employer mandate (ACA mandated that employers with 51+ employees must provide health insurance or pay a significant penalty) applies to small employers who offer coverage through an AHP, if that employer has fewer than 50 full-time employees.  There is still a lot to learn and the target is constantly moving.  Now, more than ever, employers need to work with a professional who is experienced, up-to-speed on the changing legislation, and who makes your needs the #1 priority.

Don Canada, Jr. is a successful entrepreneur, accomplished triathlete, and Employee Benefit Advisor who proudly helps Texas Surveyors with transparency.  Canada has followed employee benefit legislation for over twenty-five years, from Hillary Care in 1993, to Obamacare in 2010, now Trumpcare in 2018.  Canada writes, speaks, and consults with small to mid-size business owners who want to learn the truth about their Employee Benefits.  

Contact info:
don.canada@siliconbenefits.com 
512.426.3225