Fixed-indemnity insurance plans have become a major talking point since the introduction of the Affordable Care Act (ACA) last year. Many people have little understanding of what such plans consist of. It’s important to know the facts before you find yourself paying affordable premiums but with too little coverage for your employees to be compliant with the law.
The ACA ushered in a new era of health insurance coverage, especially for those not previously covered under an employer’s plan. The law has also made changes in the relationship between health insurance companies and consumers, now that insurance companies are unable to deny coverage due to preexisting conditions. The fact that every American can now receive coverage is an important development.
The increase in health insurance coverage requirements due to the ACA has opened the door for companies offering so-called affordable health-care coverage, often called fixed-indemnity plans. Fixed-indemnity insurance isn’t the same as regular health insurance and does not meet the requirements of the ACA for minimum essential coverage. According to the Wall Street Journal, these plans only offer fixed amounts for doctor’s visits and prescriptions, regardless of the actual cost. And they often don’t cover hospitalizations, catastrophic injury or illness, and entire categories of care like pregnancy and childbirth. This leaves the consumer with a huge out-of-pocket bill.
Despite the fact that these plans are clearly not ACA-compliant, some employers are still offering them. The Wall Street Journal article notes that due to a loophole in the law, “As long as companies offer at least one plan that complies with the law’s requirements, they are free to keep offering ones that don’t.” Employees who choose these non-compliant plans may face a tax penalty at the end of the year. However, these penalties may in fact be less than what it would cost the employee to opt for a compliant plan.
Though these cheap plans may seem initially attractive for your staffing firm and even for some of your employees, it’s important to note that the ACA is very much in flux right now, and this loophole could easily be closed as the law is challenged and refined. This is why choosing to offer non-compliant “mini-med” or fixed-indemnity health plans to your employees is a big gamble, and could also damage your reputation among potential employees. It’s important for your firm to be fully educated on your options when it comes to providing compliant health care, and for your employees to know exactly what they’re getting.
