The Patient Protection and Affordable Care Act (PPACA) passed but left many implementation details unclarified, says Michael P. Aitken. Significant regulatory process will continue for years, he says.
What is clear is that HR managers will be dealing with PPACA issues all the way along. Use this article as a checklist or reminder of all the areas in which you might need to evaluate and change your policies and procedures.
Aitken’s comments came during the Society for Human Resource Management’s (SHRM) recent annual Conference and Exposition in San Diego. Aitken is SHRM’s director, Government Affairs.
What Employers Are Thinking
Aitken started by sharing the results of a brief survey on employer reactions to the passage of PPACA.
Is your organization engaging in an analysis to determine the impact of the new health care reform law on your health care plan?
|
Will not conduct an analysis and already decided we will not drop health care coverage |
34% |
|
Currently conducting analysis |
22% |
|
Plan to conduct such an analysis |
15% |
|
Already conducted an analysis and decided not to drop health care coverage |
12% |
|
Already conducted an analysis and decided to drop health care coverage |
<1% |
|
Will not conduct an analysis and already decided to drop health care coverage |
<1% |
|
Unsure at this time |
16% |
Will your organization pass on to employees any increased or decreased health care coverage costs (e.g., premiums, co-pays, etc.) in 2011 that may be directly or indirectly related to the new health care reform law?
|
Increased
|
|
Decreased
|
|
|
costs
|
|
costs
|
|
| Highly unlikely |
2%
|
|
15%
|
| Unlikely |
10%
|
|
25%
|
| Likely |
41%
|
|
30%
|
| Highly likely |
23%
|
|
10%
|
| Unsure at this time |
23%
|
|
20%
|
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Is your organization considering alternative health care plans (e.g., less expensive coverage plans, health savings accounts, self-funding, etc.) as a result of the new health care reform law?
| Yes |
34%
|
|
| No |
30%
|
|
| Unsure at this time |
36%
|
Things to Keep In Mind
The effective dates of many provisions are several years down the road, but it is not too early to start preparing, says Aitken. Efforts to “repeal” are unlikely; technical corrections are more likely, he adds.
Insurance Market Reforms
Aitken pointed out a number of reforms coming for the insurance market as a result of PPACA. Market reforms include:
- Guaranteed issue and no health-status rating or pre-existing condition provisions for individual and small group health plans.
- Premiums to vary only by age, geography, family size, and tobacco use.
- Requirement for insured and self-insured health care plans to provide dependent coverage for married or unmarried children up to age 26.
- Requirement for health plans to provide first dollar coverage for preventative health services beginning in 2011 (unless grandfathered).
- Plans prohibited from establishing lifetime limits on the dollar value of benefits 6 months after enactment; and prohibited from establishing annual limits beginning in 2014.
- In 2014, states to create Health Insurance Exchanges where individuals and small employers can purchase health insurance.
The Individual Mandate
Individuals also have new requirements with penalties for failure to comply. Individuals must purchase health insurance coverage or pay an income tax penalty beginning in 2014.
Individuals who fail to maintain coverage are subject to a penalty that is the higher of either a flat dollar amount or a percentage of income. The penalty phases in for both individual and family coverage over time.
Penalties are the greater of $95 or 1 percent of income in 2014, and the penalties increase annually. The penalty phases up to a $695 per person annual penalty or up to 2.5 percent of income by 2016. Family coverage is capped and religious and hardship waivers are available.
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HR Suggested Actions
Here’s what Aidken suggests HR managers do:
- Brief senior leadership and employees on the new law and potential impact on organizations’ health plan(s).
- Communicate plan design changes before and during 2011 open enrollment.
- “Model” potential implications of changes on plans.
- Update Summary Plan Documents (SPDs).
- Provide new and existing employees with information about the exchanges (eligibility if employer coverage is unaffordable, free choice voucher, tax credits) beginning in 2013.
In tomorrow’s Advisor, penalties employers will have to pay if they ignore health care changes, plus an introduction to a unique program for smaller HR departments.