County: Federal healthcare law could drive up local costsWithout changes, taxes, fees will increase cost of coverage
Sussex County Council got a first-hand look at what the Affordable Care Act could cost at the local level.
By 2018, directives in the the act could increase costs to the county by more than $300,000. After a presentation by Gina Jennings at the April 9 meeting, Councilman George Cole, R-Ocean View, joked: “It's interesting it's called affordable; that's fascinating to me.”
Businesses that employ fewer than 50 people are exempt from the taxing provisions of the act, said Jennings, who will become the county's finance director in May. Sussex County employs more than 500 people; all employees who work more than 30 hours per week are eligible for healthcare benefits.
At the top of the list of new costs is an annual excise tax on insurance plans with premiums exceeding $10,200 for individuals and $27,500 for families. When the tax begins in 2018, Jennings said, the cost of the county plan would be over the threshold; as a result, Sussex would face a tax of $1,750 for each family covered, an annual $245,000 tax.
Jennings said the county covers 1,257 people on its plan at a value of $8,000 per insured per year, and that number would increase over the threshold during the next five years.
Jennings said if council approves a proposal to require spouses of employees to obtain their own employer's insurance, the county could avoid going over the thresholds and would not pay the excise tax.
The county will also pay an annual tax of $63 per person in the county's plan – or $75,600 per year – to help fund temporary reinsurance programs. The money will be used to fund exchange programs established by the state or federal government if the state does not have an exchange program in place. Jennings said the federal goal is to collect $25 billion from 2014 to 2016.
In 2013 the county will pay $1 and then $2 per insured person starting in 2014 to help fund the act's patient-centered outcomes research institute. The payment to the Internal Revenue Service will be made through 2019 and will total $2,400 a year starting in 2014.
According to the act's website, the institute is charged with examining health outcomes, clinical effectiveness and appropriateness of different medical treatments by evaluating existing studies and conducting its own. Its 19-member board will include patients, physicians, nurses, hospitals, drug makers, device manufacturers, insurers, payers, government officials and health experts. It will not have the power to mandate or even endorse coverage rules or reimbursement for any particular treatment.
Starting Jan. 1, 2014, employers with more than 50 employees that do not offer minimum essential healthcare coverage will be subject to a monthly penalty of $2,000 for each full-time employee minus 30. There are separate programs and some tax credits for companies that employ fewer than 50 people.
Employers offering coverage must provide affordable plans that cannot exceed 9.5 percent of an employee's household income or $95 a month for employee-only coverage. Jennings said pre-existing condition exclusions and annual dollar limits on essential health benefits will be eliminated.
Wellness rewards are built into the act, and employers will be able to vary premiums up to 30 percent for participation in wellness programs, she said.
Dependents under the age of 26 are eligible to stay on their parent's healthcare plan, and there are no pre-existing conditions for dependents under the age of 19. Preventive care is covered at 100 percent, and there is no lifetime maximum for people in the county's plan.
Jennings said the county plan must comply with women's health preventive care within the act and cover the cost of birth control.
In an effort to cut costs, the county's claim administrator, Integra, proposed two measures for council to consider: an employee's spouse could take other healthcare coverage if available through their own workplace; and dependents could be required to have primary coverage under insurance of the parent whose birthday comes first in the year as a way to reduce the number of dependents covered by the county.
County council will make the final determination on what cost-saving measures are instituted.
Chris Smith of Integra told council another costs savings measure – a new Delmarva network – is already in place. Using the network of 1,200 providers and eight hospitals would have saved the county $160,000 last year, said Sussex Finance Director Susan Webb.
Smith said those in the network are guaranteed payment and therefore can offer a discounted rate.
Sussex County insures more than 1,200 people
Sussex County has 1,257 people in its health insurance program, including 658 employees and retirees; 215 spouses; and 384 children.
That includes 238 people on the single plan; 80 employee and spouse; 72 employee and children; and 135 family.
Broken down into gold and silver level plans, single employees pay nothing for the silver plan and $40 per month for the gold plan; employees on the family plan pay $180 monthly for the gold plan and $140 monthly for the silver plan.