By Joel Lee
On March 11th, President Biden recently signed the American Rescue Plan (ARP) into law with the goal of advancing a wide range of policy agendas. The plan’s most publicized provisions addresses COVID-19 vaccinations and economic stimulus, but some of its most important and long-lasting effects will be on the healthcare system.
Just what does the ARP provide for in health insurance and how might those provisions impact healthcare benefits offered by self-insured employers? Just as importantly, what does the Plan do to improve health benefits for workers and their families, and how can health benefit plan administrators capitalize on these new measures?
To learn more about these implications I spoke with Frank Cardenas, President and CEO of FEDlogic, a company founded six years ago to help people maximize federal benefits for themselves and their families.
SHRM: What do you see as the most important provisions of the American Rescue Plan from the viewpoint of workers and self-insured employers?
Cardenas: There are three big items that ARPtackles and each will have potentially huge ramifications for employers and employees alike. The first is a dramatic change to COBRA. COBRA as originally designed to offer a worker who had left or lost a job to remain on the employer’s health benefit plan for up to 18 months. However, that continuation of coverage historically came at a high cost for the worker. Once on COBRA, the displaced worker would not only pay their share of the monthly benefit cost but would also bear the employer’s share. For an average worker the monthly cost of family coverage would skyrocket from $300 to $1500 or more.
For most the cost was simply more than they could afford after losing their source of income. Only those with very high and predictable monthly healthcare expenses remained insured through COBRA. Studies have shown that workers who lost their job were more likely to go without health insurance than purchase COBRA coverage.
SHRM: So COBRA rules change dramatically helping workers and employers both with the difficult transitions that come with losing a job. You said there were three key provisions. What else changes?
Cardenas: The Biden Administration has emphasized plans to expand and improve the Affordable Care Act. The American Rescue Plan has expanded available subsidies through insurance exchanges. Now these subsidies are available for individuals and families earning less than 400% of the federal poverty level. For a family of four that is right around $100,000 per year. In addition, no one who purchases insurance on an exchange will need to pay more than 8.5% of their annual income on premiums.
Suddenly, healthcare coverage bought on Obamacare exchanges can rival employer-sponsored plans in coverage and costs. Just as importantly, the ARP opens enrollment in Obamacare for 3 months – extending open enrollment through mid-May so people who are facing dislocation (or who are weighing their options) will not need to wait for the standard open enrollment in the Fall.
SHRM: What is the third provision that you think may have impact on employer sponsored health coverage?
Cardenas: The bill provides for even greater incentives for the 12 states who have not expanded Medicaid and do so by bumping the federal share of all Medicaid costs by 5%. I live in Tennessee where the state has not expanded Medicaid as allowed by the Affordable Care Act. The percent federal subsidy would rise from 66.1% to 71.1% and result in and additional $1.7 billion over two years. This does not include the roughly $1.5 billion annually the state would bring in by expanding Medicaid coverage.
Many low wage workers, even when fully employed, may earn less than 133% of federal poverty (just under $50,000 a year). For those workers and families, Medicaid can offer benefits that are better than employer-sponsored plans with zero premiums and zero deductibles.
SHRM: So you’ve outlined the benefits for workers and families who are looking for affordable healthcare coverage under ARP. What opportunities does it offer for self-insured employers?
Cardenas: These expanded coverage options present solid opportunities for employers and we’ve built FEDlogic to help both employees and their employers capitalize on these benefits. Our first mission is to help families. I know from my own experience how difficult it can be for people especially those at the lowest end of the economic spectrum to find benefits when they need them. At FEDlogic, we’re here to help. But often the help we provide employees has dramatic benefits for their employer, too.
Employers today want to be considered among the best places to work in their industry. A hallmark of one of these best-in-class employers is the level of concern and commitment they have for the people who work for them. An employer who wants to work with employees to find the best configuration of health benefits, is one that earns trust, loyalty and commitment.
In our work with large employers we have found that many times, the things that help workers and their families provide strong reward for the employer, both non-monetarily but also monetarily. We have found a great many workers who qualify for Medicare and the benefits of Medicare far exceed the employer’s health plan. By moving those workers to a Medicare health plan that is cheaper and better, we reduce the employer’s cost of providing benefits.
We have not only moved individuals to Medicare but also to Medicaid when the employee is a lower wage worker. We have helped some enroll in ACA plans where the subsidy helps make the Silver Plan more affordable than their employers plan with comparable coverage. For others, we’ve helped identify Social Security Disability coverage for families dealing with serious disease or accidents. In all of these examples, employers have seen a significant reduction in cost that improves their profitability and allows them to look at a more generous comp and benefit plan.
With the expansion of federal health benefit plans under the American Rescue Act, the opportunities have grown exponentially – which is really exciting because it opens up more possibilities for employers and employees.
SHRM: If our readers are interested in learning more about how FEDlogic can help their company and their employees what can they do?
Cardenas: We’d love to hear from them and offer a complimentary evaluation to see how we can save their company money while helping their workforce. For inquiries contact Anita Blackmer, Chief Operating Officer, at 615-948-3648 or by email anita@fedlogic.com.
CEO and Senior Partner
Lee Strategies