When discussing affordable health plans, it is important to note that there are established baselines that define what is considered “affordable”. According to Healthcare.gov, for example,
“In 2023, a job-based health plan is considered “affordable” if your share of the monthly premium in the lowest-cost plan offered by the employer is less than 9.12% of your household income.”
However, the IRS recently announced that the 2024 health plan affordability threshold will be 8.39 percent of an employee’s household income, down from this year’s 9.12 percent figure.
That would translate to a monthly premium of no more than $304 for a family or individual earning $40,000 annually. Of course, the actual costs of health coverage for any family or individual varies depending on a wide range of factors. And one of the challenges for small businesses is to be able to provide affordable health care choices for their workers.
In terms of employee affordability, one of the main concerns for your workers is the cost of monthly premiums. For many, this is their major healthcare cost, especially if they are younger, healthy, and make little use of health care services.
Each year, health insurance companies submit rate filings to state regulatory bodies that outline their projections and anticipated rate adjustments for health plans in the upcoming year. These submissions offer valuable insights into the factors that insurers anticipate will influence healthcare costs in the approaching year, including those for employer-sponsored plans.
One recent study has revealed that,
“For 2024, across 320 insurers participating in the 50 states and DC, this analysis shows a median proposed premium increase of 6%. Based on a more detailed analysis of publicly available documents from 58 insurers, growth in health care prices stood out as a key factor driving costs in 2024. In addition to inflation, insurers also mention changes in pandemic-related costs and the unwinding of Medicaid continuous coverage, though the latter are having a small, if any, effect on premiums.”
The primary drivers for these premium rate increases are inflation and the unwinding of the Medicaid continuous enrollment provision.
According to the Peterson-KFF Health System Tracker, on April 1, 2023, states started unwinding the Medicaid continuous enrollment provision, resulting in at least 3.8 million people being disenrolled from Medicaid as of August 1, 2023. Most of these individuals will no longer qualify for Medicaid and will likely enroll in ACA subsidized health plans.
Aside from premium costs, there are several tactics that employers can implement to help lower the cost of healthcare for their employees and ensure that they have access to affordable health plans.
- Assess Provider Networks: Evaluate the size of carriers’ provider networks, as larger networks often lead to long-term cost savings. Align your chosen providers with your business’s priorities, aiming to offer the best possible care network while reducing out-of-pocket expenses for both you and your employees.
- Explore Premium Offset Plans: Consider premium offset plans that allow you to potentially cover future premiums with the accumulated value of your policy after several years of out-of-pocket premium payments.
- Offer Health Savings Account (HSA) Compatible Plans: Provide Health Savings Account (HSA) compatible plans, commonly known as High-Deductible Health Plans (HDHPs), which can be paired with HSAs. These plans offer tax advantages and flexibility for both employers and employees.
- Implement Health Reimbursement Arrangements (HRAs): Introduce Health Reimbursement Arrangements (HRAs), which are employer-funded health benefit plans. HRAs reimburse employees for qualified medical expenses, including co-pays, deductibles, out-of-pocket costs, and individual health insurance premiums. They offer tax advantages to both employers and employees.
- Explore Direct Primary Care (DPC): Consider the Direct Primary Care (DPC) model, allowing primary care physicians to provide services directly to patients without the involvement of insurance companies. Patients pay a monthly or annual fee for access to a range of primary care services, including consultations, exams, care coordination, and some lab services, all without additional fees at the time of service.
Affordable Health Plans And The Aca: Key Aspects You Need To Know
The Affordable Care Act (ACA) has been a transformative force in healthcare in the United States. One of its primary objectives is to make quality healthcare accessible to a broader population by establishing standards for affordable health plans.
In addition, there are key aspects of affordable health plans under the ACA and stipulations that shape these crucial insurance options.
- Premium Tax Credits
One of the central mechanisms for promoting affordability under the ACA is the provision of premium tax credits. These tax credits are designed to help individuals and families with moderate to low incomes cover the cost of their health insurance premiums. By reducing the monthly premium burden, these tax credits make health insurance more affordable for millions of Americans.
- Cost-Sharing Reductions
In addition to premium tax credits, the ACA introduces cost-sharing reductions (CSRs) to further enhance affordability for eligible individuals and families. CSRs reduce out-of-pocket costs, including deductibles, copayments, and coinsurance, for those with low incomes
- Essential Health Benefits
Under the ACA, all qualified health plans must cover a set of essential health benefits. These benefits include services such as preventive care, emergency services, prescription drugs, maternity and newborn care, mental health services, and more.
- No Discrimination Based on Preexisting Conditions
One of the most significant aspects of the ACA is prohibiting insurance companies from denying coverage or charging higher premiums based on preexisting conditions. This protection ensures that individuals with chronic illnesses or past medical issues have equal access to affordable health plans.
- Guaranteed Issue and Renewal
The ACA guarantees the right to purchase health insurance during specified enrollment periods, known as open enrollment. Insurance companies must also renew coverage, preventing them from canceling policies without cause. These provisions ensure that individuals have consistent access to health insurance and are not left without coverage due to circumstances beyond their control.
- Coverage for Young Adults
The ACA allows young adults to stay on their parents’ health insurance plans until the age of 26. This provision has been instrumental in ensuring that recent graduates and young professionals have access to coverage, even if they do not have access to employer-sponsored plans.
- No Annual or Lifetime Limits
The ACA abolished annual and lifetime limits on essential benefits. This means that insurance companies cannot place a cap on the total amount they will pay for essential covered services over a year or a lifetime. This protection is particularly vital for individuals with chronic conditions that require ongoing and potentially costly care.
- Marketplace Options
The Health Insurance Marketplace, also known as the Exchange, is a key component of the ACA. It offers a platform where individuals and families can compare and purchase health insurance plans themselves instead of choosing employer-sponsored healthcare options. Plans purchased through and Exchange are often done so with the assistance of subsidies based on income.
By focusing on premium tax credits, cost-sharing reductions, essential health benefits, and protections against discrimination based on preexisting conditions, the ACA has created a framework for affordable health plans that prioritize the well-being of individuals and families.
In light of these stipulations established by the ACA, individuals and families now have greater opportunities to access comprehensive, affordable health insurance plans.
The ACA requires that employers, even those with less than 50 full-time employees and are not required to offer health coverage plans, must offer plans that are deemed “affordable.”
As one source explains,
“The concept of affordability is based on the cost of the employee’s premium contribution for employee-only coverage under the lowest-cost eligible health plan offered by the employer. The calculation is based on the employee-only rate regardless of whether the employee chooses family coverage or any other tier of coverage. To avoid penalties for offering unaffordable coverage, the employer should make certain that affordability is based on the organization’s lowest applicable wage.”
And, as we noted at the start of this article, the baseline is determined each year by the IRS.
J.C. Lewis Insurance Services Can Help With Your Healthcare Costs
We bring more than four decades of experience and continue to offer quality health insurance plans. J.C. Lewis Insurance Services works only with the leading health insurance carriers licensed to do business in the states that we operate in.
As a family-owned and operated health insurance agency located in Santa Rosa, California, we are a small business. And that means that we understand the particular needs and challenges small business owners face. In addition to being specialists in finding and managing affordable health insurance plans for small businesses, we are also licensed and certified by each insurance carrier we represent.
So, whether you’re considering small group health insurance for you and your employees or you’re simply looking to make changes to your existing plan, we understand that you’ll likely have questions and concerns.
We always welcome your questions about health coverage insurance, and you can be confident that we will help you find the right solution for your needs.
J.C. Lewis – make us your preferred partner to help you make the right decision for your health coverage needs.