Skinny Plans for Over 50 Full Timers?

[Ann H]

Ann:
Thanks for your informative reply.
So assume if a large employer offers a skinny MEC, and it is accepted by the employee, they are not available for credits in the Exchange, right?
If they do not accept the MEC, they still are not available for credits in the Exchange, for the employee turned down appreopriate employer-sponsored coverage, assuming it was affordable.
What do you think about the legality of offering solely a skinny MEC versus a skinny MEC, along with a fat plan?
It seems to me for an employer to offer a skinny MEC, he seems to avoid the penalty, but he does not allow the employee the option of going to the Exchanges and receiving subsidies whether the employee accepts or refuses the employer plan.
Don Levit

1st question - correct. If an employee ENROLLS IN the skinny MEC, even though it isn't adequate (60% actuarial value or more) or affordable, then the employee won't get a subsidy for the months that they are ENROLLED IN it. If they had never enrolled in it in the first place, or if they disenroll, then they may be subsidy eligible.

2nd question - correct. If the employer had offered this triad (skinny MEC + affordable/adequate plan + a richer plan), then the employee still doesn't get a subsidy because the 2nd plan choice was affordable & adequate. In fact, the employer might only want to offer the first 2 plan choices and not the richer plan. But sheeez, why not? Since the first plan (the skinny MEC) is designed to get out of Penalty A for not having insurance, and the 2nd plan (the affordable/adequate one) was designed to keep the Employer's contribution low but also avoid Penalty B, then why not offer a richer plan design for employees who want to "buy up" to it?

3rd question - If you offer solely a skinny MEC, you bypass Penalty A for not offering insurance. But you still might get stung by Penalty B for every employee who gets a subsidy, because your MEC is not adequate (at least 60% av). Depending on the employer's situation, this may be a good strategy. For instance, I talked to a restaurant who had more than 50 FTE's (full-time equivalents), but only about 45 actual full-timers. Since the penalties are only assessed on full-time employees, they felt that those 45 full-timers wouldn't get subsidies anyway. So, in essence, they faced no "penalty B".

Last sentence - true.

why is the gov't allowing small groups under 50 full timers to have to structure group offerings at a Bronze level but large groups, say (is it 50 or 100) or more have to offer lesser plans with the MEC but they comply? Less benefit rich plans than a bronze level plan, and bigger companies can sneak by the law with this? Makes no sense.

Because they passed the law without reading it?

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Glad I only sell Indy... You group people make my brain hurt

This makes my brain hurt, too. And since the large employer penalties have been delayed, I'm really done posting about it for now. Have too many other things to do.

 

[Happy Texan]

Ann:
Could you E-mail me at [email protected]?
Thanks,
Don Levit,CLU,ChFC

 

[Yagents]

16% Of Large Employers Plan To Offer Low-Benefit 'Skinny' Plans Despite ACA: Survey - Kaiser Health News

It works like this: Employers can shield themselves from health law penalties by offering insurance that meets tests for affordability and value -- regardless of whether anybody signs up. At the same time, workers can avoid the ACA's individual penalty by enrolling in a company skinny plan, which qualifies as "minimal essential coverage" for individuals under the health law by the mere fact that it's employer-sponsored.

 

[Quotebroker]

Just got a look at one of these. Skinny is an understatement. No ER coverage, no inpatient coverage, no outpatient, no mental health, no MRI/CT/PET, no rehab, no durable med, no facility fees, no skilled nursing, no specialty drugs.

Actuarial value 60.7%

 

[Happy Texan]

16% Of Large Employers Plan To Offer Low-Benefit 'Skinny' Plans Despite ACA: Survey - Kaiser Health News

It works like this: Employers can shield themselves from health law penalties by offering insurance that meets tests for affordability and value -- regardless of whether anybody signs up. At the same time, workers can avoid the ACA's individual penalty by enrolling in a company skinny plan, which qualifies as "minimal essential coverage" for individuals under the health law by the mere fact that it's employer-sponsored.

Ya gents is right on according to an article I read today
It may have been on health affairs.org
Timothy Jost was quoted in the article and his name seems to be synanamous with ACA
The skinny plan can merely be preventive care
The key is also offering a second plan which is ACA compliant with sixty percent actuarial value and affordable to the employee
Don Levit

 

[Ann H]

Just got a look at one of these. Skinny is an understatement. No ER coverage, no inpatient coverage, no outpatient, no mental health, no MRI/CT/PET, no rehab, no durable med, no facility fees, no skilled nursing, no specialty drugs.

Actuarial value 60.7%

Yeah, no kidding about "skinny". Twiggy would have looked chubby next to these anorexic plans. ACA in its drive to eliminate bad insurance like mini-meds just reproduced mini-med look-alikes and gave large employers a reason to add them to the menu of options. Such a shame. It's further a shame that anyone who enrolls in those plans automatically has Minimum Essential Coverage and therefore doesn't qualify for a subsidy to buy a better IFP plan.

 

[Happy Texan]

Yeah, no kidding about "skinny". Twiggy would have looked chubby next to these anorexic plans. ACA in its drive to eliminate bad insurance like mini-meds just reproduced mini-med look-alikes and gave large employers a reason to add them to the menu of options. Such a shame. It's further a shame that anyone who enrolls in those plans automatically has Minimum Essential Coverage and therefore doesn't qualify for a subsidy to buy a better IFP plan.[/QUOT

Ann
It is my understanding that even if they do
Not enroll in the skinny plan they still are ineligible for subsidies because of the affordable fat
Plan
What enrolling in the skinny plan does is prevent the employee from paying a fine for not having coverage
Don Levit

 

[Ann H]

Yeah, no kidding about "skinny". Twiggy would have looked chubby next to these anorexic plans. ACA in its drive to eliminate bad insurance like mini-meds just reproduced mini-med look-alikes and gave large employers a reason to add them to the menu of options. Such a shame. It's further a shame that anyone who enrolls in those plans automatically has Minimum Essential Coverage and therefore doesn't qualify for a subsidy to buy a better IFP plan.[/QUOT

Ann
It is my understanding that even if they do
Not enroll in the skinny plan they still are ineligible for subsidies because of the affordable fat
Plan
What enrolling in the skinny plan does is prevent the employee from paying a fine for not having coverage
Don Levit

It depends on the employer's strategy. If the employer has a skinny MEC plan AND ALSO an affordable/adequate MEC plan, then the employee & dependents cannot get a subsidy. An employer would use this strategy if they need to avoid both the "uninsured" penalty and also the "unaffordable/inadequate" penalty.

But in some employer's cases, they need to avoid only the "uninsured" penalty which is applied to ALL full-time employees (less the first 30 or 80 in some cases), but they don't need to avoid the "unaffordable/inadequate" penalty because it only applies to full-time employees who get a subsidy. Many employers are finding that few, if any employees may qualify for a subsidy anyway, and the transition relief allows employers to just gauge that based on the W-2 wage rather than full household anyway.

So, some large employers may just use a skinny plan, and others may dual choice that with an affordable/adequate plan, and some others add a 3rd plan that has more attractive benefits.

 

[Happy Texan]

It depends on the employer's strategy. If the employer has a skinny MEC plan AND ALSO an affordable/adequate MEC plan, then the employee & dependents cannot get a subsidy. An employer would use this strategy if they need to avoid both the "uninsured" penalty and also the "unaffordable/inadequate" penalty.

But in some employer's cases, they need to avoid only the "uninsured" penalty which is applied to ALL full-time employees (less the first 30 or 80 in some cases), but they don't need to avoid the "unaffordable/inadequate" penalty because it only applies to full-time employees who get a subsidy. Many employers are finding that few, if any employees may qualify for a subsidy anyway, and the transition relief allows employers to just gauge that based on the W-2 wage rather than full household anyway.







So, some large employers may just use a skinny plan, and others may dual choice that with an affordable/adequate plan, and some others add a 3rd plan that has more attractive benefits.

Might the 3 plans lead to adverse selection, particularly the plan that has the more attractive benefits?
Although if all the plans on the private exchanges are group plans, I assume adverse selection is not as much of an issue.
It does seem to be an issue on the SHOP exchange for smaller employers.
Thanks for your detailed explanation. It highlights which penalty is more favorable for the employer.
Don

 

[Ann H]

Might the 3 plans lead to adverse selection, particularly the plan that has the more attractive benefits?
Although if all the plans on the private exchanges are group plans, I assume adverse selection is not as much of an issue.
It does seem to be an issue on the SHOP exchange for smaller employers.
Thanks for your detailed explanation. It highlights which penalty is more favorable for the employer.
Don

Hi Don -

Dual choice, or multi-choice has always presented an adverse selection element. In the old-fashioned multi-choice option, the sick people chose the highest benefit plan, the young & healthy chose something with affordable premiums and affordable copays, and the highly compensated or those with greater financial acumen chose the HSA. So, that's why many carriers put an extra load on dual choice, to cover the adverse selection element.

In IFP, adverse selection is worse when it comes to plan choice. At least in group insurance, employees usually had only 2 (or perhaps 3) plan choices. With IFP it's not so. Mom & Dad sit at the kitchen table (with their agent or other adviser perhaps) and choose which plan is most economically advantageous for their particular family based on premium and known medical expenses.

So, that was yesterday. Now, health insurance is guaranteed issue with no pre-ex. So, adverse selection in group insurance multi-choice is ameliorated somewhat by the fact that sick people could get low-deductible health insurance on their own if they wish.