The U.S. Supreme Court’s landmark ruling on June 28 to uphold nearly all provisions of President Obama’s health-reform law removes any excuse for employers to drag their feet implementing reform-driven changes to their health plans.
Uncertainty on whether the law still would be binding on plans was hindering implementation, many sources say, but with the ruling, employers know they must proceed with full implementation.
For example, employers were holding off cost containment changes to health plans that would have caused the loss of plans’ grandfathered status. Now those plans have much less time to decide whether to overhaul their plan, Attorney Ron Peck with the Phia Group in Braintree, Mass., says.
Plans also had been holding off implementing reform’s summary of benefits and coverage, Peck continues. Plans and third-party administrators still haven’t decided whether they will outsource drafting of SBCs, what they will include in the SBC and whether they should call on U.S. Department of Labor officials for help on how to draft them.
Peck likens the employer attitude on compliance before the ruling to a student with a test in the morning. But instead of studying for the exam, the student relies on weather reports that school will be cancelled the next day due to snow. He wakes up only to find out weatherman was wrong; he will have to take a test in a few hours.
Plans may now know they will have to implement health reform, but cannot do so because the government hasn’t yet explained important reform requirements. Attorney Jim Napoli with Proskauer Rose in Washington D.C., identifies at least four areas where clarity is needed from the government:
- What is an “essential health benefit”? This is important, because failure to offer such a package of benefits can subject employers to fines.
- How is a full-time employee defined and how do you count your employee base for purposes of determining “shared responsibility” payments?
- How will automatic enrollment work? Not many health plans auto enroll their workforce, and questions remain about harmonizing enrollment periods, notice requirements and opt-out provisions, Napoli says.
- How will they notify employees about insurance exchanges and the differences between employer coverage and exchange coverage. Contact and comparison information might not exist because exchanges themselves might not exist when his provision becomes effective in March 2013.
New Enrollees, New Costs
The health reform provision that’s going raise employer health plans the most is a direct result of the individual mandate, says Napoli. The requirement that every person be covered will force employees (who previously opted out of coverage) to now join employer plans. Meanwhile employers must foot no less than 60 percent of the total premium cost for each employee, another reform requirement.