By JULIE LIEDMAN, a freelance writer who lives in Philadelphia
On March 23, the one-year anniversary of the Patient Protection and Affordable Care Act (PPACA), the U.S. Department of Labor issued its first annual report on self-insured employee health benefits plans, mandated by the legislation.
One important aspect of the report for self-insured employers was what it omitted: Nowhere did the report claim that self-insured employers are more likely to have problems funding their plans than employers that fully fund their health benefits plan through traditional health insurance.
According to the DOL report, about 12,000 health plans filing a Form 5500 for 2008--the latest year for which complete data is are available--were self-insured, and 5,000 mixed self-insurance with insurance. Self-insured plans covered 22 million people, while mixed plans covered 25 million. Health benefits plans covering private-sector employees must file the form if they cover 100 or more participants or hold assets in trust. Because many self-insured health plans do not meet the filing requirements and therefore haven't filed the form, however, the total number of self-insured plans probably is underestimated. The DOL report acknowledged this, another success for the self-funding marketplace.
What's more, that number might be growing. Healthcare reform could make self-insurance more attractive to many companies, according to one of the nation's biggest self-insurance industry trade groups.
"We expect a larger interest in self-insurance than ever before when additional regulations such as exchanges, 'pay-or-play' and vouchers go into effect (by 2014)," said Mike Ferguson, chief operating officer of the Self-Insurance Institute of America.
By 2014, PPACA requires that health insurance be more affordable and easier to purchase for small businesses and individuals through statewide exchanges. Employers with 50 or more full-time employees must either provide specified minimum levels of coverage to their employees or pay an excise tax. This is referred to as "pay or play."
Employers who offer more than the minimum must provide a "free choice voucher" to certain eligible employees. For every such voucher the employer provides to an employee who qualifies, the employer will be required to pay the exchange where the employee uses the voucher to purchase coverage for an amount equal to the portion of the monthly cost of coverage that the employer would have paid.
Smaller employers may find it financially advantageous to pay for their own firm's risk than to be subject to the new provisions.
Purchasing a plan through the exchange, for instance, where premiums will be a function of the broader risk pool and subject to risk adjustment, could be costly, Ferguson said. If enough small firms with healthier enrollees opt out of a state's small-group market in 2014, that state exchange could experience adverse selection.
"Based on anecdotal feedback we've gotten from our members," said Ferguson, "they've digested the regulations currently in place, adapted to any new requirements and life goes on."
April 12, 2011
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