Employers have been in wait-and-see mode pending the Supreme Court decision on health care reform legislation. If the court had overturned it, several mandates would have been scrapped for employers.
Now they will need to quickly turn their attention to fulfilling requirements that face serious penalties for non-compliance. Employers face several daunting questions, including what are the upcoming deadlines? What are the most immediate compliance demands? And what challenges will employers face to both provide affordable and comprehensive health benefits while keeping costs down?
“Now that the Court has ruled, U.S. employers will turn to executing the strategies for 2013 and 2014 that they have so far put on hold. In turn, agencies such as the Department of Labor, the Internal Revenue Service and Health and Human Services, will need to work overtime to issue the significant amount of guidance employers need to implement these rules," said J.D. Piro, national practice leader in the Health Law Group of Aon Hewitt, in a statement released shortly after the Court's announcement.
Aon says there are a number of actions employers will likely take moving forward:
■ Focus on managing complex compliance issues, including the implementation of summaries of benefits and coverage, understanding preventive care requirements for women for non-grandfathered plans and managing the individual mandate’s necessary reporting requirements.
■ Focus on communicating with their employees. Employers need to ensure their employees understand changes associated with the PPACA, like the new $2,500 health care FSA limit, and have the resources they need to make decisions accordingly.
■ Determine a retiree health care strategy. Many employers are moving away from sponsoring retiree health care programs as they utilize both government and private exchanges. With respect to prescription drug benefits, many employers are moving to a Medicare Part D employer group waiver plan in lieu of applying for the Medicare Part D retiree drug subsidy.
■ Explore alternative strategies like corporate health care exchanges to combat continued rising health care costs. A recent Aon Hewitt survey showed that 72% of companies are very or somewhat interested in exploring whether a corporate exchange model can be an effective long-term solution for managing the cost of an employee health plan.
Next up, employers will have to ensure they are distributing the Summary of Benefits and Coverage required for fall open enrollment. The SBC needs to go to current participants and all interested participants.
“The ACA provides employers an opportunity to redefine their role in health care and create a comprehensive health care strategy in 2013 to reflect this role."
They'll have to work fast—a recent ADP poll says employers found half or more of small and midsized companies are not prepared, even though the deadline is Sept. 23.
Over time, Aon Hewitt predicts employers will continue to look closely at their risk exposure in offering health benefits and designing and implementing strategies to control and manage health risk, absence risk and health care cost risk.
“The ACA provides employers an opportunity to redefine their role in health care and create a comprehensive health care strategy in 2013 to reflect this role,” said John Zern, Americas health & benefits practice director at Aon Hewitt. “But with or without the ACA, the issues of rising health care costs, work force health and productivity and absenteeism remain. Employers should continue to look at emerging approaches, such as corporate exchanges, to improve workforce health and performance and break away from the health care cost trend.”
That health care cost trend has been steadily rising for employers. According to a September 2011 report from Towers Watson, the annual cost of medical and pharmacy coverage increased to $11,204 per employee for active coverage in 2012 (an increase of 5.9 % versus 7.6% for 2011). Roughly two-thirds of employers (66%) will increase employees’ share-of-premium contributions for single-only coverage for 2012, and 73% will increase them for dependent coverage.
While only 8% of responding employers say it's likely they'll drop health care coverage, most agree costs are unsustainable.
For the longer term, HR experts predict wellness initiatives in the workplace may be the most effective effort to help mitigate rising health insurance costs. According to a survey released this week from the Society for Human Resource Management, 45% of respondents now offer health and lifestyle coaching, an increase from 33% in 2008. Another 35% of respondents provide rewards or bonuses for completing a health and wellness program, marking a jump from 23% in 2008.
"The best programs are those that are put in a high level and an organization and you have a cultural change in terms of your board and CEO and senior management are all behind it. You're starting to change the values of your organization," Mark Schmit told BenefitsPro Tuesday at SHRM's 2012 conference in Atlanta. "If that culture starts to develop, anything that you do within that culture changes behaviors—like incentives for stopping smoking and discounts for risk assements. Those are what lead to the real beneficial changes."
[See also: PPACA: A History]
Health care reform timeline:
- Patient Centered Outcomes Research Fee
- MLR reporting goes live
- Administrative simplification begins to phase in
- Summary of Benefits and Coverage
- Women's preventative services
- Medical device fee
- Exchange coverage notice
- FSA Cap
- Tax deduction for employers for Medicare Part D subsidy eliminated
- Guaranteed Issue
- Individual coverage mandate
- Individual subsidy
- State individual and small group exchanges operational
- Rating rule changes
- Insurer taxes
- Employer "pay or play" mandate
- Essential health benefits
- Medicaid expansion
- 90-day waiting period
- Auto-enrollment of newly hired, newly eligible full-time employees
- Annual reporting of employee coverage
- Definition of full-time employees
- Wellness incentives
- Medicare Advantage MLR requirements
- Increased penalties on individual mandate
- Increased insurer taxes
- States must allow groups with <100 employees into exchanges (2016)
- "Cadillac tax" (2018)