By Stan Friedman
CHICAGO, IL (October 2, 2013) — The decision by Bethany Benefit Service to be grandfathered under the Patient Protection Affordable Care Act (PPACA) provides “significant advantages” for the people covered by the medical and dental health insurance plan, says Elliott Johnson, controller for the Evangelical Covenant Church.
Bethany provides coverage for pastors, employees of local Covenant churches and regional conferences, conference centers and camps, Covenant pastors who work for voluntary employers of the Covenant Pension Plan, and denominational offices. It is available for employees who work a minimum of 20 hours a week.
It currently covers 1,380 employees, 820 spouses, and 1,370 children.
Monday was the first day people can sign up to purchase insurance through state-based health-care exchanges—also known as the Health Care Marketplace. The regulated plans are federally or state-administered.
As of January 1, most people, with some exceptions, will be required to have health insurance or pay a penalty if they don’t. The penalty starts at $95 or 1 percent of a person’s income—whichever is higher—in 2014. It is phased in over time to $695, or 2.5 percent of income, by 2016.
The ACA allowed Bethany to be grandfathered because the insurance was offered prior to March 23, 2010, when the act was signed, says Johnson. Such plans are free from most of the provisions in the health care law and are not eligible for federal subsidies. If an insurer or employer makes significant changes to a plan’s benefits or how much members pay through premiums, copays or deductibles, then the plan loses that status.
“The decision to be grandfathered provides significant advantages for those we cover,” Johnson says. Such advantges include greater responsiveness to employees’ needs, lower deductibles, and benefits provided.
“By being grandfathered, we can still administer our own claims appeals process,” Johnson says. “Therefore the Board of Pension and Benefits makes decisions on approving denied insurance claims instead of a faceless third party.”
There are four levels: bronze, silver, gold and platinum. The difference among the levels is the amount of premium and expenses paid by the insurer. People enrolled in the bronze plans will pay the lowest premiums, but the amount of expenses paid by insurance (60 percent) will be less. The silver plan will cover roughly 70 percent, the gold will pay 80 percent, and the platinum will cover 90 percent.
All of the plans must cover a set of basic services, such as prescription drugs, maternity care, mental health services, and emergency room visits.
Bethany pays roughly 86 percent, Johnson says, and offers other advantages as well.
- Bethany’s annual and lifetime maximums exceed the limits set by law.
- It provides all essential benefits.
- Benefits are offered on the first day of employment rather than the 90-day waiting period allowed under the act.
- The deductible of $300 for single coverage and $600 for family coverage is less than most plans.
- No one is disqualified for pre-existing conditions
Individuals with incomes between 100 percent and 400 percent of the federal poverty level who purchase insurance plans via an exchange will be eligible to receive federal subsidies to help pay premium costs.
However, employees whose insurance is considered “affordable” under the act are not eligible for tax subsidies. Insurance coverage is deemed “affordable” if the employee’s premium responsibility for single health insurance is less than 9.5 percent of their household income. Extra charge for family coverage is not included in this calculation.
Churches may choose to offer a dollar sum for employees to purchase their own health insurance through the Marketplace, but those funds will no longer be eligible as tax-exempt. Rather, those funds will be considered income on which tax must be paid and may decrease the estimated subsidy offered through the Marketplace.
The act requires all employers to distribute a specified letter and form to all employees. The notices also must be given to all new employees with 14 days of hire.
Bethany has emailed a copy of the documents to each church. They also are available as a download from the website.
Johnson notes that Bethany has outperformed other medical plans. It was able to freeze medical and dental premiums for next year at 2013 rates. Rates also were frozen in 2005.
Over the last 10 years, Bethany’s rates have increased about 4.5 percent each year, while rates in the rest of the market have more than doubled (increased 142.4 percent) over the same 10-year period.
The health insurance and prescription drug co-pays and deductibles remain unchanged. Rates for life insurance and long-term disability likewise remain the same. They have not changed for several years.
In addition, Bethany has given a June premium holiday for two of the last 10 years, which resulted in more than $2 million in premium savings for Bethany customers.
Johnson adds that Bethany has worked with churches, camps, and conferences to apply for the federal health care tax credits that have been available and will stop after this year. This has resulted in $2 million in refunds over the past two years, Johnson says.
Employers have until May 15, 2014, to apply for the final year that the credit is available, Johnson says.
For additional assistance, visit the Bethany website, email the service’s office, or call (800) 313-8955.