Some PPACA Compliance Tabled Until After Elections

July 10, 2012
Source: eba.benefitnews.com

Most employers waited for the U.S. Supreme Court’s landmark decision upholding health care reform before developing a strategy on provisions in the Patient Protection and Affordable Care Act (PPACA,) slated to take effect in 2014 and beyond, according to a new Mercer survey.

But some eyebrows will be raised at Mercer’s findings that the waiting game continues for 16% of the more than 4,000 respondents, who admitted no action will be taken on 2014 compliance until after the November elections. Forty percent said they will begin examining these parts of the law now that the court has ruled.

Although health care reform still faces a contentious political outlook, Mercer suggests that employers should stay on track in their efforts to comply with PPACA as enacted or else they may face penalties.

“Employers who prefer to continue in wait-and-see mode until after the November elections will have less time to prepare, should they ultimately decide to comply with the law’s 2014 requirements,” says Mercer partner Tracy Watts. “In the meantime, they still need to comply with all the requirements that have already gone into effect.”

Certainly, employers must act quickly to implement new requirements for 2012 and 2013, such as providing benefit summary disclosures, complying with new dollar limits on health care flexible spending arrangements, and increasing Medicare withholding for high earners. But the rules going into effect in 2014 that are aimed at expanding access will have broader implications for many employers.

More than a fourth of survey respondents (28%) said that compliance with the new requirement that employees working an average of 30 or more hours per week must be eligible for coverage will present a “significant challenge” for their organization.

“Employers with large part-time populations, such as retailers and health care organizations, are faced with the difficult choice of either increasing the number of employees eligible for coverage, or changing their workforce strategy so that employees work fewer hours,” said David Rahill, President of Mercer’s health and benefits business. “With the average cost of health coverage now exceeding $10,000 per employee, a big jump in enrollment is not economically feasible for many employers.”

The requirement to auto-enroll newly eligible employees in a health plan – which means that employees will automatically be covered unless they take action to opt out – is also expected to increase the rolls of the insured for many employers. Nearly one-third (29%) of respondents to the Mercer survey said this will be a significant challenge, especially because other provisions of PPACA will limit the amount of health plan costs employers can pass along to employees through higher premiums or deductibles.

Still, the provision that worries most employers – 47% of survey respondents – is the excise tax on high-cost plans, expected to go into effect in 2018.

“Employers already struggling with annual health care cost increases of double or triple general inflation are determined to avoid this tax,” said Sharon Cunninghis, U.S. leader of Mercer’s health and benefits business. “We’ve been seeing a lot more interest in cost-saving measures, such as consumer-directed health plans and employee health management, since the tax was proposed.”

When asked whether they agreed or disagreed with the statement, “[The reform law] has provided the impetus for our organization to pursue more aggressive health benefit cost-management strategies,” more than half – 52% – agreed. Employer actions were one factor that helped to slow health benefit cost growth in 2011 relative to 2010.

Survey results suggest this trend will continue. Asked whether they planned to be more aggressive about managing plan costs going forward now that health reform has been confirmed, 54% said yes. And while 41% said no, it’s only because they were already taking aggressive action to manage expenses.

A Mercer webcast will be held on July 12 at noon EDT to provide a closer look at how the Supreme Court’s decision will affect employers going forward.

 

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