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The county has been looking to save money on its health insurance costs by shifting most employees to federal coverage under the Affordable Care Act, but that may not be as easy as expected.
When Congress passed the act – commonly known as Obamacare – the government did not plan for companies and other large employers dropping their insurance and moving everyone over to the federal system, local insurance agent Michael Chapman told the county Commissioners Court on Monday.
“The exchange was designed for small groups and individuals,” he said. “It was not designed for large groups.”
He expects Congress to quickly close the loopholes that make that possible.
After Jan. 1, 2014, companies with the equivalent of 50 or more full-time employees are required to provide insurance for all full-time workers or pay a fine. Some companies have started relying more part-time employees.
Lamar County is following the lead of others who feel the fine is cheaper than paying for the insurance. Instead of paying $12,000 per employee, the county might only have to shell out $3,000 each, County Judge Chuck Superville said. The county figures to save about $1.3 million with the move.
“Assuming the benefits are as good as we provide now, I see a significant number of our employees going to the exchange, and we pay the fine and reap the benefits,” he said.
Federal subsidy rates will be based on mid-level “silver” plans, and likely not quite as good coverage as the county currently offers employees, Chapman said.
The federal government is expected to set up insurance exchanges where people can purchase their own policies. Based on income and age, households may qualify for subsidies to help with buying the insurance.
The average cutoff for those subsidies is around $44,000 a year, Superville said. For Lamar County, about 25 employees make more than that and 150 less. The average salary is $32,779.
“The main question I see for Lamar County is: Will it be a better deal for those employees to go to the exchanges?” Superville said. “They have to feel like they’re not being abandoned.”
That doesn’t mean the county will get all 150 on the federal system, Chapman said. Perhaps as many as 50 of those won’t because of an IRS ruling last month. The IRS said that a household that has access to “affordable” insurance – roughly within 9.5 percent of the adjusted gross income – for a single person is not eligible for any kind of subsidy, he said.
For example, a jailer working for the county after Jan. 1 might be eligible alone because of insurance rates and income. But if the spouse worked for a company or school district that offered insurance within that “affordable” range for that worker, the household would not be eligible – no matter how expensive dependent coverage might be under either policy.
The county is looking at raising insurance rates specifically to make employees eligible for federal coverage.
“When you raise these rates here so they qualify for the subsidy, you’re going to impact those employees,” Chapman said.
Even if the county makes its plan work for Obamacare, it will likely face problems trying to insure the smaller group that remains because small group policies are different, Chapman said.
The county needs to make a decision by the end of the summer to finalize its budget for next year, Superville said. Precinct 3 Commissioner Rodney Pollard said he didn’t see how the county could make plans just yet.
“It’s all speculation at this point,” he said. “Nobody really knows what that act really involves at this point.”
By law, employees were supposed to be notified of their options under the new exchanges by March 1, but the government has had to move that deadline. Chapman did not see much hope the exchanges would be set up in time.
“The big question is: Will there be exchanges set up on Jan. 1?” he said. “I would be prepared for not being able to go to the exchanges, because that’s your worst case scenario.”
He suggested putting out bids for private insurance. Lamar County’s insurance claims have come down. Combine that with offering two levels of insurance with higher or no copays and moving retirees to a system that reimbursed them for finding their own insurance, and he estimated the county could potentially save up to $500,000 a year.
Superville doubted that was possible, when all the county has heard is to expect increases of roughly $250,000 a year under the best scenarios. The last time the county tried to bid for insurance, no one wanted to make an offer.
The county judge expressed confidence multiple times that the system would be in place by the first of the year.
Superville plans to keep the topic on the agenda so commissioners can continue to discuss it.
“It’s more scary because we’re talking about big money, and it’s health care,” he said. “The only way to get past big, scary things is to put the light of day on it.”