This column is for those of you who so fear and/or detest health care reform that merely hearing or seeing those words makes you change the channel or turn the page. Since the most basic summaries of health care reform are 10 to 20 pages long, we can’t make you an expert in one column, but we can highlight some key points for employers.
Changes that you have to accept.
For employers who have health insurance policies (vs. being self-insured), many of the new requirements will be implemented by your insurance carrier. They will simply present you with a revised policy that reflects the new health care reform requirements, such as the new prohibition on requiring participants to pay anything for basic preventative care.
Changes that you have to implement.
Some of the new requirements require action by employers. For example, you are generally required to give employees notice in writing 60 days in advance of any material changes to their health insurance coverage, including changes to the employee cost of coverage. To accomplish that, employers will, for example, need to get renewal notices from insurance carriers much earlier so that if employees will have to pay more, the employer can issue the notice 60 days prior to the new plan year. Another example is that employers will have to report the value of health coverage on employee W-2 forms (although this will not make health coverage taxable income).
“Grandfathered” plans.
You may have heard that existing health plans can be “grandfathered” and thereby avoid health reform requirements. If you are interested in claiming grandfather status, you need to understand the following: First, you obviously need to check with an expert and make sure your plan can qualify as a grandfathered plan. Second, a grandfathered plan is not exempt from all health reform requirements, so you better understand which apply and which don’t. Third, there are a lot of ways that you can lose grandfather status. Again, you need expert advice if you want to maintain grandfather status.
Many changes apply now.
Many health reform changes apply for health plan years beginning after Sept. 23, 2010. For calendar year plans, that means changes are effective for 2011, but that means employers need to prepare now to ensure that they will be in compliance when 2011 arrives.
Certain major changes do not apply until at least 2014.
Fortunately, some of the most significant changes do not take effect until 2014 or later. This includes the excise tax on larger employers Feedback who fail to offer certain minimum coverage, the “Cadillac” tax on expensive health coverage and state health care exchanges. 2014 is after the next Presidential election. I would not count on outright repeal of health care reform, but substantial changes are possible depending on election results and other factors, so stay tuned.
Cost.
The national consulting firm Mercer estimates that in the near term, health care reform will increase employer health care costs by four to six percent above the “normal” increases that employers would otherwise suffer. Cost containment was the health reform goal that got kicked to the curb in the political struggle to get a health reform bill passed. Over the longer run, estimates are all over the place. Many are concerned that health reform as enacted requires Congress to approve significant Medicare cuts, cuts of a magnitude that Congress has historically refused to make, and that the mandate for healthy individuals to get health insurance has such weak penalties that they will just pay the penalties and simply get health coverage when they become sick.
