In March, shortly after passageof the Patient Protection and Affordable Care Act, AmericanAgent & Broker spoke with Adam Bruckman, president andchief executive officer of Digital Insurance Inc., anational employee benefits broker based in Atlanta, about the lawand its potential impact on agents and brokers.

At the time, AA&B, a sister publication ofNational Underwriter, noted that despite copious mediacoverage, there was still much misunderstanding and manymisconceptions about the law and how it will affect businesses,including independent agents and brokers.

Mr. Bruckman was closely involved with the issue from serving onthe government affairs subcommittee of the Council of InsuranceAgents and Brokers and being privy to discussions taking place onCapitol Hill. The good news, AA&B noted, was that forindependent property and casualty insurance agents and brokers thelaw presents some great opportunities to prove their mettle totheir customers.

Q: Is this a good opportunity for agents/brokers to actas trusted advisers to their business clients?

Mr. Bruckman: We look at the current healthcare reform arena as an excellent opportunity for agents andbrokers to serve as trusted advisers. Certainly, our role as abroker adviser will become increasingly important because of newoptions, such as the “exchanges” entering the marketplace. We willcontinue communicating with our broker partners about what thislegislation means and how it affects their customers.

Q: How does the law affect small businesses with lessthan 50 employees– both agencies and their customers?

Mr. Bruckman: Small businesses will have theopportunity to pick a health plan offered through the newstate-based purchasing exchanges, which will offer the same levelof purchasing power that employees of larger companies benefit fromtoday. Smaller companies–if they have 25 or fewer employees andaverage wages of less than $50,000–will also be able to get taxcredits of up to 35 percent of premiums to help buy insurance. Thistax credit will rise to 50 percent in 2014.

Q: How are you reassuring your clients about the changein requirements?

Mr. Bruckman: Education is key. We haveformalized a training program for all our benefits consultants,making sure they are equipped to address various issues andconcerns that our clients may have. Each digital client is assigneda benefits consultant, so two-way communication is constant. Wehave specialized webinars in the pipeline and issue e-mail blastsand e-newsletters on a regular basis.

Q: How will the new law affect agent and brokers' groupemployee benefits business?

Mr. Bruckman: For agent and broker businessesto thrive and grow in this new health care environment, they reallyneed to focus on the client. Operational efficiencies andvalued-added services will also become increasingly important. Westrongly believe that success–and ultimate client satisfaction–isbuilt on the ability to evolve, adapt and change, certainly nowmore than ever.

Summary

o The $940 billion health care reform package is projected toextend insurance coverage to roughly 32 million additionalAmericans.

o Major coverage expansion begins in 2014.

o Most Americans will now be required to have health insuranceor pay a fine.

o Larger employers will be required to provide coverage or riskfinancial penalties.

o Total individual out-of-pocket expenses will be capped.

o Insurers will no longer have the ability to deny coveragebased on gender or pre-existing conditions.

o Insurance subsidies for middle- and lower-income families willbe expanded.

o No government-run insurance plan was included in thelegislation.

Provisions effective today:

o Insurers cannot cancel policies if a person becomes sick.

o Insurers cannot place lifetime dollar limit caps onpolicies.

o Insurers cannot deny coverage to children due to pre-existingconditions.

o Parents can keep children on their policy up to age 26.

o New insurance plans will cover the full cost of certainpreventative care and exempt such care from deductible payments.(This requirement wouldn't apply to existing policies until2018.)

o Smaller companies are allowed tax credits of up to 35 percentof premiums to help buy insurance if they have 25 or feweremployees and average wages of less than $50,000. (This tax creditwill rise to 50 percent in 2014.)

o A government-established “ombudsman” and claims process willbe established to assist patients in reconciling contested medicalbills.

Starting in 2011:

o People will no longer be able to use flexible spendingaccounts for over-the-counter medicines unless specificallyprescribed by a doctor.

o Beginning in 2013, the accounts will be limited to a $2,500annual maximum with annual inflation increases.

Provisions to take effect in 2014:

o Most Americans will be required to carry health insurance orface a fine. There is an exemption for low-income people.

Fines start at $95 a year or 1 percent of income, whichever isgreater, capped at the cost of the average health insurance plan.By 2016, the fine will increase to $695 a year or 2.5 percent ofincome.

o Insurers cannot deny adults coverage because of a pre-existinghealth condition or charge them more. (In the meantime, the billwill set up high-risk pools to help people with illnesses buycoverage.)

o Insurers cannot charge women more.

o Medicaid for the poor will be expanded to cover people withincomes up to 133 percent of the federal poverty level; $14,404 ayear for an individual, and $29,327 for a family of four. Childlessadults will be covered for the first time.

o Small businesses, the self-employed and the uninsured can picka health plan offered through the new state-based purchasingexchanges, which will offer the same kind of purchasing poweremployees of larger companies benefit from today.

o New policies sold on the exchanges would be required to covera range of benefits (defined as essential benefits) including:hospitalizations, emergency services, doctor visits, prescriptiondrugs, maternity and newborn care, mental health and substanceabuse services, lab and rehab services, wellness care, chronicdisease management, and pediatric services–including oral andvision care.

Employer responsibility:

o Employers will be fined if the government subsidizes theirworkers' coverage. The $2,000 per employee fee will be assessed onthe company's entire work force, minus an allowance.

o Companies with 50 or fewer workers are exempt from therequirement. (Part-time workers are included in the calculations,counting two part-timers as one full-time employee.)

Paying for the legislation:

o A new 3.8 percent tax on investment income for individualsearning more than $200,000 and couples earning more than$250,000.

o Starting in 2013, individuals will pay a higher Medicarepayroll tax: 2.35 percent on earnings of more than $200,000 a yearfor an individual and 2.35 percent on earnings of more than$250,000 for couples.

o In 2018, people with high-end “Cadillac” health plans will besubject to a new 40 percent excise tax on their benefits.

o Medical device makers, pharmaceutical companies and insurerswill be subject to new excise taxes.

Laura Mazzuca Toops is editor of AmericanAgent & Broker magazine, part of Summit Business Media'sProperty & Casualty Media Group, which includes NationalUnderwriter.

This article originally appeared as a web exclusive onAA&B's website (www.agentandbroker.com) onMarch 30, 2010.