It has now been almost a year since health care reform was first enacted. The first year involved many compliance challenges, not the least of which was keeping up with the many pieces of guidance issued by DOL, IRS and HHS. Plans had to expand coverage (more dependents, fewer dollar limits, no more questions about pre-existing conditions, no rescissions and preventive care with no cost sharing). They had to update plan documents to inform employees about the changes. But there’s also strategic planning, like thinking about about the essential benefits package companies soon will have to provide and predicting how plans will be affected by state-run exchanges for health insurance purchases.
But out of all of these things, five stand out as needing employer attention right now. According to Maureen Maly, an author on http://www.erisawonk.com, employers should be focused on the following issues:
1. Understanding the big picture – If health care reform withstands the legislative, judicial and political challenges it currently faces, then the landscape will be substantially different by 2014. Health insurance exchanges will be in place, where individuals can purchase health care coverage, some with subsidies, and individuals and employers will be subject to health insurance coverage mandates. It will be important for employers to understand how the new exchanges work, which employees will qualify for subsidies, and which individuals and employers will be subject to the health insurance coverage mandates.
2. Modeling Costs Post-2014 – Employers should be modeling their costs under various alternatives in 2014. One alternative might be to stop providing major medical insurance. This would mean sending employees to the new health insurance exchanges for coverage and paying the no coverage penalty of $2,000 per full-time employee (assuming at least one such employee obtained a subsidy for exchange coverage). Another alternative would be to keep providing coverage. However, in that case, employers will want to consider whether they need to make changes to the cost and quality of their coverage to avoid penalties that will apply if an employer’s coverage is considered unaffordable or low value. Of course, cost is not the only factor driving health insurance coverage decisions, and employers will also want to consider other factors, such as competitiveness, employee productivity and morale.
3. Getting ready for new reporting and disclosure requirements – Health care reform contains a number of new reporting and disclosure requirements that will begin taking effect in the next three years, including a new requirement to report the value of health insurance coverage on Form W-2, new mini summaries of health coverage (both effective in 2012) and new cost and coverage reporting requirements (effective in 2014). Although we are still waiting for guidance on the specifics of these requirements, employers should begin alerting their systems and administration personnel that these new obligations will be coming soon.
4. Updating plan documents – Most employers made a number of changes to their health plan documents in 2010 to comply with some of the new health care reform requirements, such as covering adult children to age 26, eliminating lifetime limits on essential benefits, and notifying plan participants about grandfathered status if a plan decided to become a grandfathered plan. Employers should make sure that their plan documents and summary plan descriptions accurately reflect all of the changes they made. In addition, as employers renew contracts with service providers to benefits plans, they should consider whether the contracts require changes for health care reform, such as new claims processes, incorporating revisions to the internal process and external review, new indemnification provisions, etc.
5. Monitoring developments – The constitutionality of the individual mandate provisions of health care reform continues to be challenged in courts all over the country, and courts have come to differing decisions. Experts are in widespread agreement that this issue will be resolved by the Supreme Court. The only issue is how soon that will happen. And, even if the Supreme Court finds the individual mandate provision unconstitutional, the fate of the rest of the healthcare reform provisions is unclear. Health care reform has also faced legislative challenges and although it is unlikely to be repealed in its entirety under the current administration, there are likely to be some changes, such as repeal of the broader Form 1099 filing requirement. Finally, we are still expecting administrative and regulatory guidance on a number of important health care reform provisions that will affect health plans, such as the reporting and disclosure requirements mentioned above, the meaning of essential health benefits, and the definition of full-time employees. Employers should watch all of these developments closely.
This post was contributed by Maureen Maly, and was originally posted on http://www.erisawonk.com. It also appeared on Passion for Subro, the blog of Adam Russo, Esq., contributing editor of Thompson Publishing’s Employer’s Guide to Self-Insuring Health Benefits.