By Mick Constantinou, Advisor, Employee Benefits
Connelly, Carlisle, Fields, & Nichols, A UBA Partner Firm
The Supreme Court decision last June removed the remaining obstacles blocking implementation of health care reform. Prior to the ruling, many employers took a “wait and see” approach and were left scrambling to qualify and quantify how those aspects of the Patient Protection and Affordable Care Act (PPACA) of 2010 that went into effect January 2013 would impact their business and their employees.
Beginning in 2014, the requirements of PPACA will change the way employers plan and execute their benefits renewal process. The difference is that the impacts forthcoming, both financially and in terms of access to health care, will be far greater than those elements of health care reform that have been implemented to date.
Employers and employees will be left scrambling again if the age-old, “I worry about our benefits during the last three months of our plan year,” paradigm continues. There are decisions that should be made between now and 2014 because the changes are far greater in scope. Mishandling or delaying the question of health benefits now can carry a big price tag in dollars, reputation, competitiveness, retention, employee engagement or a combination of all of the above.
In its current form and implementation schedule, PPACA will forever alter how health care is purchased, delivered and funded by employers. The complexities of the law will touch all employers, regardless of their size, and all employees in a variety of ways and to varying degrees. The impact, often referred to as “play or pay” or “the mandate”, is different for groups with under 50 or more than 50 full-time employees.
Employers that currently offer group benefits or are thinking about offering group benefits, regardless of the number of full-time equivalent employees, should include the following as part of their planning process during 2013:
Minimum Value - Determine the actuarial value (AV) of their current plan design as well as calculate the AV of plans under consideration for 2013 to ensure the designs comply with the minimum requirement to cover an estimated 60 percent (the bronze standard) of covered health care expenses.
Affordability – Confirm your current employee contributions satisfy the affordability test of costing no more than 9.5 percent of an employee’s earnings.
Tax Subsidies – Identify which employees may qualify for subsidized health care through the exchanges and therefore subject you to a $3,000 annualized penalty.
Penalties – If you decide to pay the $2,000-per-employee penalty rather than continue to offer employer-sponsored group coverage, you should calculate which of your employees would be better off and which would be worse off with such a decision.
Medicaid – Quantify how the expansion of Medicaid will impact your costs and which employees will qualify under the new rules and Medicaid tables.
Eligibility – Review how your current benefits eligibility will be altered by the new regulations on eligibility.
Enforcement – Understand when and how the new rules are expected to be enforced, and be aware of the new requirements placed on employers and employees to ensure compliance with the provisions of the health care reform law.
The capabilities, expertise and analytical tools available to benefit advisors that support employers are key value-adds. Employer groups should consider these as part of their checklist when vetting the advisory firm that can best support them through 2013 in preparation for 2014 and beyond. Employers require compliance programs, solutions and services designed to help them stay informed, manage changes in benefits compliance and labor laws, and be prepared for the impacts in 2014 with sound analytics.
Employers will have a number of obligations and opportunities related to health care reform. This law is complicated, and each employer will need to base its decisions on its particular situation, which will require an advisor with the analytical tools to model a variety of scenarios specific to your company.