How Much Will The Affordable Care Act Affect Group Insurance for Charter Schools?

James Stovall

Charter school benefits can cover a range of options for teachers, including retirement plans, paid leave, vacation days and much more. It's not uncommon for facilities to offer health insurance plans either, especially with the Patient Protection and Affordable Care Act taking effect in 2015.

For school administrators, this means they have to review existing policies and budgets to assess where the ACA will hit their institutions.

Understanding the basics of the ACA
While charter schools may receive public funding from the state, their independent operation means they're free to choose the most appropriate health plans for the faculty. However, the federal government's passing of the ACA indicated a significant change on how insurance is coordinated in the U.S.

Providing teachers with insurance takes extensive planning.Providing teachers with insurance takes extensive planning.

Passed and signed into law by President Barack Obama in 2014, the ACA affected national rules on health insurance. Although there's no specific law requiring smaller businesses to provide coverage to employees, there are regulations they need to follow when purchasing plans for teachers. For example, Small Business Majority explained that employers with fewer than 50 full-time workers won't be financially penalized for not providing insurance.

Under federal law, small employers like charter schools are guaranteed group coverage if administrators choose to purchase plans, regardless of anyone's current health statuses. That's one of the bigger changes caused by the ACA: the elimination of pre-existing conditions from coverage denials. While this amendment might be more relevant to individual plans, it provides more opportunities to group insurance, too.

Knowing the differences between individual, group
Once conversations about insurance begins, some employees might become confused about the ins and outs in health plans. This isn't uncommon, as insurance coverage can be a complex topic to navigate.

Group medical coverage refers to a single policy that's purchased and issued to a collective, such as a school full of teachers and other staff members. These plans cover all eligible employees, and possibly their dependents, for clinical services. However, this isn't the only way in which group insurance differs from individual.

Typically, insurers have based individual insurance premium rates on the detailed medical histories of persons or their families. However, removing pre-existing condition denials means this will be different going forward in 2015. But with groups, insurers determine pricing based on risk factors balanced over the entire staff using general information, such as age or gender.

Paying for group insurance
It's inevitable that the topic of pay will come to the forefront of discussions about health insurance. According to 2014 data from the United Benefit Advisors Health Plan Survey, which covered nearly 10,000 employers in the U.S., the average cost per employee for group insurance was $9,504, with businesses covering $6,276 of that total.

"Employers should be aware that the [ACA] offers small businesses tax credits to help offset the cost of insurance."

The ACA does provide some tax credits to small employers to reduce the costs of insurance for all employees. To qualify for these cuts, businesses have to pay at least half of their workers' premiums and have fewer than 25 full-time employees who earn an average of $50,000 or less per year.

In addition, certain products cost more than others depending on the benefits they granted to workers. For instance, the New York City Charter School Center noted that Preferred Provider Organization (PPO) plans can be the most expensive, but offer both in- and out-of-network benefits and eliminate the need for primary care physician referrals. On the other hand, Health Maintenance Organization (HMO) plans deliver in-network only benefits and make the provider responsible for prior authorizations.

Charter school administrators have their hands full deciding which health insurance plans are appropriate for their workers. But with the ACA providing tax breaks, the decision is made easier for picking the best options on the market.