Welcome to the complex world of health insurance compliance! For insurance carriers, agents and brokers, and employers who sponsor health plans, these are rough waters to navigate.
The U.S. healthcare system is composed of private for-profit companies, government agencies, and nonprofit organizations. And the price of healthcare varies dramatically depending on where and how someone seeks out services – as well as who’s paying!
Largely in an attempt to protect consumers, the U.S. federal government and each state and territory have adopted laws governing health insurance. In part three of this three-part series, we’ll cover some of the most basic “who, what, and how” topics that apply to employers in the health insurance game.
Healthcare laws impacting employers
Nearly 50 percent of Americans receive health insurance through their employer. The next largest sources of health insurance in the U.S. are Medicaid and Medicare, covering 19.8 percent and 14.2 percent of Americans, respectively. This makes employers the largest source of healthcare in America, by far.
As a major part of the healthcare industry (whether they like it or not!) employers have their fair share of laws and regulations to comply with. Just a few of the factors employers have to consider when offering health insurance to their employees include:
- Affordability: As of 2021, the IRS requires employers to offer plans where the lowest priced option does not exceed 9.83 percent of an employee’s household income.
- Offering coverage: Employers with 50 or more full-time or full time equivalent (FTE) employees are required to offer health insurance coverage to at least 95 percent of their employees and their dependents.
- Minimum essential coverage: Offering just any health plan isn’t enough. Employers are required to offer at least one plan option that meets minimum levels of coverage and covers specific required services, mandated by the Affordable Care Act.
On top of the laws governing actual health plan design, cost-sharing, and coverage, employers are subject to laws such as HIPAA, which protects its employees’ privacy and The Employee Retirement Income Security Act of 1974, which requires employers to provide standard information to all employees regarding their health plans.
Healthcare compliance challenges for employers
When it comes to designing employee health plans that meet federal and state requirements, many employers depend on their agent or broker for guidance. Understandably, it can be challenging for employers to keep up with laws and regulations that influence their employee benefits on their own. While agents and brokers do have to follow the laws as well, it’s ultimately the employer’s responsibility to keep its health plans in compliance. And the government won’t hesitate to impose hefty penalties for violations.
This is why many employers, just like insurance carriers and insurance agencies, employ a compliance officer. In many cases, this single (often-overworked) employee is a lawyer who is responsible for way more than just healthcare law compliance. A compliance officer might have to oversee compliance with laws that span all aspects of the business.
From employee safety, governed by the Occupational Safety and Health Administration, to labor practices dictated by the Fair Labor Standard Act, to cyber-security and data protection, a compliance officer is pulled in many different directions. Healthcare law compliance is likely to be just a part of the job, although it may be the most frequently changing and complicated piece to keep up with.
Healthcare compliance solutions for employers
Luckily for employers, there are plenty of places to turn to for help with compliance. When it comes specifically to healthcare compliance, many employers depend on their benefits broker to keep them abreast of the ever-changing healthcare laws. Fortunately, as we’ve covered above, insurance brokers and agents have tools at their disposal to make their own compliance with healthcare laws simpler and more automatic. As the competition for business among benefits brokers remains fierce, the agencies who can offer their clients assurance of hassle-free compliance will undoubtedly score an upper hand.
More Americans get their health insurance through an employer group plan than any other single source. This makes employers into “health companies” whether they like it or not. While many employers rely on their agents or brokers, and the insurance carriers, they deal with, to maintain legal compliance, there’s still a lot of responsibility on employers to design and administer health plans that comply with all state and federal laws.
The future of healthcare compliance
Healthcare in America is a hot-button issue that continues to receive political focus and media attention. As affordability, privacy, and consumer protection remain major concerns, we anticipate regulation will also keep increasing.
Regardless of your position in the industry, as an insurance carrier, MGA, MGU, independent agency, broker, or employer, the stakes are high when it comes to complying with health insurance laws. Hiring robust internal teams is not practical for all organizations, and completely outsourcing the responsibility for compliance may be too expensive or otherwise unworkable.
Health insurance is highly regulated and will continue to evolve, and each member of the distribution pipeline bears responsibility for following the law. In many ways, because of the nature of healthcare, the penalties for non-compliance are not solely about the dollars involved.
Keeping up with regulations, though, doesn’t have to be the tedious manual process it once was. Digital tools that put compliance at the foreground – without sacrificing speed and growth – can stop regulatory violations before they happen. For more on how AgentSync can help take the effort out of the licensing and appointing side of health insurance compliance, book a demo with us.