The new landscape of health insurance
Veterinarians will feel the impact as individuals and as practice owners when provisions of the Patient Protection and Affordable Care Act that will transform the landscape of health insurance take effect next year.
Many of the details of implementation are still up in the air. Yet, veterinarians can begin educating themselves now about the basics and looking to advisers for assistance, according to experts on health insurance in the veterinary community.
Small businesses
“Healthcare Reform: Are You Prepared?” was the title of a talk at the March conference of the American Animal Hospital Association by Marcus Newman, executive broker with Veterinary Employee Insurance Services. He covered some of the ramifications of the Affordable Care Act for veterinary practices as small businesses.
One noteworthy change relates to how employers will report employee wages to the Internal Revenue Service. The W-2 form has two new boxes for information collection: a box for how much the employer paid toward group health insurance and a box for how much the employee paid toward group health insurance.
Newman outlined three new fees that insurance companies must pay to the federal government. The fees add up to 5.5 percent to 6 percent in costs, he said, and companies probably will pass along the increase to policyholders.
Starting in October, individuals and small businesses will be able to purchase health insurance for 2014 through new public exchanges. Employers need to notify employees about the availability of the public exchanges, but the Department of Labor had not finalized the relevant regulations as of press time.
As of 2014, employers with more than 50 full-time-equivalent employees must offer affordable health insurance to employees who work 30 hours a week or more—or face fines. Newman said businesses with 50 or fewer full-time-equivalent employees that currently offer a group plan might want to explore the option of getting out of the insurance business by giving a stipend to employees to purchase health insurance independently.
“We have health insurance because we’re taking care of people,” he said. “You can’t just be in a vacuum on this issue. It’s impossible. It affects your business at its core, your people.”
Newman suggested that practice owners should consider consulting with an insurance broker about how to proceed in the coming year.
He said, “If we can determine a strategy that makes sense now without you having to do anything, then when we get all the other information, it’s a simple matter of plugging it in to find out if we’re going to execute or go back to the drawing board. Being ready is paramount.”
Individual market
Libby Wallace, chief executive officer of the AVMA Group Health & Life Insurance Trust, suggests veterinarians in the individual insurance market also should consider consulting an insurance agent about the coming year.
The shifting landscape led to the GHLIT losing underwriting for health insurance as of 2014. The Trust will discontinue offering its current major medical plans for AVMA and Student AVMA members after Dec. 31, 2013.
Wallace said one key provision of the Affordable Care Act is that, starting next year, insurance companies will no longer be able to refuse coverage on the basis of an individual’s pre-existing conditions. In the individual and small group market, companies will be able to vary rates only on the basis of age, within certain parameters, and smoking status, but not gender or health status.
Also starting next year, Wallace noted, most individuals must purchase health insurance or pay a penalty.
Depending on the state, the new public insurance exchanges will be through the state or federal government or through a partnership between the two. Tax credits are available for people with income up to 400 percent of the federal poverty level, or $94,200 for a family of four in 2013, who purchase coverage through a public exchange.
“Essentially, an exchange is an online tool to help review available insurance in your state,” Wallace said. The states also will provide navigators who can answer questions.
Private exchanges provide another avenue to purchase health insurance. The GHLIT is building a private exchange to help current policyholders and other AVMA and SAVMA members find appropriate major medical plans.
“A member can input their demographic information, their zip code, number of dependents and their ages, and the exchange will give them the medical plan options that are available in their geographic area,” Wallace said. Policyholders with GHLIT also can turn to their agent for assistance.
Wallace said the landscape of health insurance continues to shift as federal regulators finalize regulations. Sources of information include the Department of Health and Human Services and the Kaiser Family Foundation.
A tax on medical devices
A 2.3 percent federal excise tax on medical devices, effective this year, is among the lesser-known provisions of the Patient Protection and Affordable Care Act.
The tax does not apply to devices specific to veterinary medicine, but it does apply to devices in use in both human and veterinary medicine.
“I don’t think Congress wanted to or intended to have veterinary medicine subsidize human health care,” said Dr. Mark Lutschaunig, director of the AVMA Governmental Relations Division. “I just think that they couldn’t come up with the right legislative language that would limit or negate the impact on veterinary medicine.”
Whether the tax affects the cost of veterinary care depends on whether device manufacturers decide to maintain prices or pass along the tax, Dr. Lutschaunig said.
A Senate bill and a House bill to repeal the tax have bipartisan backing, he said, but replacing the revenue would be tricky.