A Health Care Q&A
With the health care reform bill approved by the House of Representatives and the Senate and signed into law by President Barack Obama, employers and employees are waiting to see what kind of effect the law will have on their lives (and their finances) — and when.
To answer that question, Nightclub & Bar spoke with Innovative Risk Solutions president Sean Gormley for his take on how the law will affect the on-premise industry. An employee benefit firm, Innovative Risk Solutions handles the design, implementation and service of employer-sponsored group insurance plans for companies including Philadelphia-based Libre Management, operator of Cuba Libre Restaurant & Rum Bar, Missile Bar, 32 LUXE LOUNGE, Shampoo Nightclub and more.
NCB: How does Cuba Libre’s currently provide insurance policy for employees?
Sean Gormley: Generally speaking, employees have the availability of two plans. We have implemented a “base” and “high option” plan. This gives employees an opportunity to choose coverage that is most suitable to their needs. Both options are considered comprehensive. The employer’s philosophy was the strongest component when designing these offerings. The principals had expectations for the workforce that we were able to negotiate with the carriers. This philosophy has a direct impact on [employee] appreciation and retention.
NCB: How will this insurance coverage change with the new health care reform act?
Gormley: Right now we are suspecting employees will have the following changes:
1. Lifetime caps on coverage will be prohibited
2. Children with pre-existing conditions cannot be denied coverage
3. Dependent children must be offered coverage under their parents plan to age 26
NCB: What’s the implication for larger chains vs. smaller chains? Do you think one will be more affected than the other?
Gormley: First you need to differentiate between large and small employer groups. A small employer has 100 employees or less. These groups will be automatically permitted to participate in Small Business Health Options Programs (SHOP)*. Groups with more than 100 employees will only be able to participate in the SHOP if the state in which they are headquartered in permits this. The SHOP should have various plan options. One who is qualified will be able to participate in 2014.
NCB: How might it affect smaller bars/restaurants that only have one or two locations?
Gormley: Total number of locations does not matter. The total number of employees, income levels and employee contributions are all factors.
NCB: Will this law have any impact on part-time employees, which many bartenders/employees are?
Gormley: This is hard to talk about today. We think that most part-time employees will not be affected by the mandates for employer-sponsored plans*. The number of hours worked by part-time employees will determine whether or not the employer will be compelled to offer coverage.
NCB: What can nightclub/bar/restaurant owners do right now to prepare themselves for upcoming changes to health care coverage?
Gormley: Prepare employees for the plan design changes that will take place at the renewal after September 23, 2010. These include the prohibition on lifetime caps, no denial of coverage to children with pre-existing conditions and the availability of coverage under their parents for children up to age 26.
NCB: How do you think this law will change the on-premise industry as a whole?
Gormley: I suspect more employers will be offering benefits to their employees if they currently are not.
Keep an eye out for continuing health care coverage from Nightclub & Bar.
*Information from Innovative Risk Solutions explains SHOP as follows:
SHOP Exchanges and Subsidies (Small Business Health Options Programs)
• States will be required to have Health Care Exchanges where small businesses will be able to pool together to buy insurance. Individuals with income higher than 133 percent but less than 400 percent of the federal poverty level (about $29,327 to $88,200 for a family of four).
• Small employers (those with 100 employees or less) will have the ability to purchase insurance at lower rates through these exchanges.
• Large employers (those with more than 100 employees) will be able to participate in SHOP.
• Premiums will be capped at a percentage of income from 3% to 9.5%.
• Over the next four years until these state-run exchanges are in place, small employers with 10 or fewer Full Time Equivalent (FTE) employees learning less than $25,000 will be eligible for a tax credit of 35% of health insurance costs. Companies with 11 to 25 FTE workers earning up to $50,000 will be eligible for partial tax credits.
• After the exchanges are in place, the credit will be increased to 50% for the first two years the company buys insurance through the exchange.
*Information from Innovative Risk Solutions explains Employer-Sponsored Plan rules as follows:
• Group health plans will be prohibited from setting rates or denying coverage based on pre-existing conditions, from placing excessive waiting periods on eligibility for benefits for new hires (90-day maximum) and from placing annual and lifetime dollar limits on benefits. Insurers will only be able to vary premiums based on geographic location, age and tobacco use.
• Group health plans will be required to cover specific services and at least 60 percent of employee health costs overall. Plans that do not meet these requirements will be subject to additional penalties.
• Employees who pay more than 9.5 percent of their income on premiums or whose group health plan covers less than 60 percent of the cost of their benefits will be eligible to purchase coverage through the state-run exchange.
• The reform package does not require employers to provide health insurance to their employees. However, beginning in 2014, tax penalties will be assessed for companies with 50 or more full-time employees that do not provide health insurance of up to $2,000.00 per employee, with the first 50 employees being exempt.
• Employers with more than 200 full-time employees must automatically enroll employees in their group health plan and allow employees the opportunity to opt out.
• A grant program will be established to encourage small and mid-sized employers to develop workplace wellness programs.