Another delay in the Affordable Care Act has been revealed this week, topping off an already dizzying list of exceptions, exemptions, and holdups to the mandate. First, there was the delay of Obamacare's Medicare cuts until after the election. Then there was the delay of the law's employer mandate. Then came the delay in enforcing of a number of key eligibility requirements; Obamacare will operate on the "honor system," not attempting to verify an individual's income when he or she is applying for subsidies. Now we have learned that another key provision of the health law—its caps on out-of-pocket insurance costs—will also be delayed for one more year. This applies specifically to plans that are "de-coupled" meaning that different providers provide major medical, dental, and pharmaceutical coverage - which is common in larger group plans (e.g. often times pharmacy and dental is self-insured - hence it is not provided by one carrier and is thus falls under this provision).
The out-of-pocket cap, which includes deductibles and co-payments, was supposed to limit consumer costs to $6,350 for an individual and $12,700 for a family. This requirement has been delayed, allowing some insurers and businesses to set their own limits starting in 2014. The administration defends this move, claiming that insurance companies, which use different computer systems and companies to administer coverage, simply needed time to comply. Criticism and skepticism, of course, are widespread. But what the change does mean is that some employers—namely, those with more than one benefit provider—could use plans with higher limits or no limit at all on out-of-pocket costs during this grace period. The result is that the "affordability" component of the Act – e.g. the part of the Act that was meant to prevent a person from serious financial harm due to excessive medical expenses, is now delayed for a year. Potentially more troubling is the incentive for both individuals and businesses to drop out of the insurance market altogether.
As a quick recap of the items that have been delayed that impact the business owner:
- Employer requirement to provide coverage – still required but not enforced – based on the 'honor system.'
- Affordable coverage - minimum value provision – waived for one year.
Obamacare and its lengthening list of exceptions and delays are troubling to say the least. We will keep you updated as changes occur. I anticipate a busy and contentious few months ahead in Washington as Obamacare is set to start enrolling individuals into its state exchanges on October 1.
