The rollout of the federal Affordable Care Act has produced some uncomfortable side effects for several hundred lawyers in New York. Virtually all participants in healthcare plans offered by the New York State Bar Association and New York City Bar will see changes to their benefits next year.
The biggest changes affect solo practitioners, most of whom will be dropped from their bar groups’ health programs in 2014 under new federal requirements for insurers.
Until now, most solos have qualified for small group coverage under their bar association programs. Health plans for groups typically carry lower premiums and access to wider networks of healthcare providers than policies written for individuals. The Affordable Care Act, however, requires “sole proprietors” to purchase individual health coverage if they do not employ anyone but themselves, meaning many of them no longer qualify for small-group plans.
That’s the case for Lorese Phillips, a Manhattan solo whose practice focuses on estate planning and elder law. She has been paying $825 per month, or about $10,000 annually, for healthcare coverage through the city bar’s program.
Phillips, 56, said she was “blindsided and angry” when she learned two weeks ago she no longer qualifies for the small-group coverage. She said she’d been “relying on the President’s assurances” that she would be able to keep her existing health plan and doctors.
The city bar has brought in an insurance broker to work one-on-one with solos who now must find individual policies. But the only alternative offered by the city bar’s insurance provider, Oxford Health Plans, features a limited network that Phillips’ doctors aren’t part of, she said. She has not yet decided whether she’ll sign up.
“I highly respect my team of physicians,” Phillips said. “I worked very hard to find people I respect and trust, and I would be disheartened to leave any one of those people because of the loss of my insurance.”
The ACA attempts to “grandfather” in existing health plans if they meet certain standards. But those standards have proven too strict for many plans, causing insurers to scrap them altogether. As a result, cancellation notices have gone out to more than four million Americans.
Many people will end up paying more per month on the individual insurance market. But even where monthly premiums are less expensive, customers may have to settle for less coverage, higher deductibles and higher co-pays.
Both the city and state bar associations have sent letters to their members explaining how the changes will affect them.
Up to 300 solos will likely be cut from the city bar’s health insurance program, which has about 700 participants. The rest will see modifications to their monthly premiums and coverage options as Oxford revises all its plans in New York to bring them in line with the ACA.
The city bar is still waiting for the details of the new Oxford plans, said the bar group’s general counsel Alan Rothstein. Existing plans will expire on March 31.
“People are not happy, to say the least, to lose their coverage,” Rothstein said.
The state bar’s program currently covers about 2,000 participants. Coverage for 596 solo practitioners will be dropped throughout 2014 as each solo’s plan reaches its expiration date. Many of the individual plans are more expensive. Even where premiums are less expensive, however, they may carry higher deductibles and co-pays.
Brian McLaughlin, a health insurance broker and vice president of USI Affinity, has been working to find alternative plans for solos cut from the state bar’s program.
“It’s not that we can’t find them coverage or that they can’t afford the coverage,” McLaughlin said. “It’s just not the coverage they want. It’s not the access they’ve traditionally been accustomed to.”
The snag affects freelancers and independent contractors across all professions, many of whom join professional associations such as bar groups for benefits like cheaper rates via group health insurance. But Obamacare is set up to push healthy people into the same individual insurance pools as sicker people, McLaughlin explained, as to drive down rates for everyone. Independent workers are bearing the brunt of that push.
By making just one employee, such as an administrator or secretary, eligible for health benefits, a solo practitioner can be treated as a small group and get better coverage, McLaughlin said.
But that’s a tall order for solos like Phillips, who works alone out of her apartment and meets clients at the city bar headquarters to keep down the cost of running her practice. Although the alternative plan she has explored carries a cheaper monthly premium, she said she’d be willing to pay more to keep the benefits she has now.
“If that is what I have to do, I would likely elect to pay more in order to keep the same doctors,” Phillips said. “But as my overhead goes up, I’d have to work more and possibly raise my professional rates.”
“We all have questions on whether or not this act will work and whether it will actually provide us with affordable care,” she added.
Changes are affecting many small law firms as well.
The Law Offices of Alan J. Schwartz, a Garden City criminal defense and general practice firm, got a cancellation notice for its health plan earlier this year. Riva Schwartz, who is an office manager for her husband and oversees employee benefits, said she has been unable to find a satisfying alternative.
“All we could find was a high-deductible plan,” Schwartz said. “It also treats my husband and me as two individuals instead of as a family.”
Under the ACA, firms with fewer than 50 full-time employees are not required to provide them with coverage. Until now the Schwartz firm has covered one other lawyer and two paralegals at their firm. But all three declined to enroll in the firm’s new plan, choosing to try their luck at the state exchange instead.
“I’ve been paying and paying all these years thinking it’d be there when I needed it, and now it’s not,” said Schwartz, who is 60. Her husband is 61. “They’ve managed to break what’s not broken.”
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