Congress has returned to Washington from its August recess with what is arguably a slate chock-full of critical issues with tight deadlines. And while discussions of repealing the Affordable Care Act (ACA) may continue, they are being overshadowed by more pressing issues including spending bills, immigration, and emergency relief for areas affected by severe weather. Plus, the GOP will need to act fast if they’re going to use their current repeal strategy that leverages the budget reconciliation rules set to expire at the end of September.
The last legislative session underscored the contentious debate on the best path forward. While the political clash has caused more uncertainty and even public bewilderment, we have recently begun to see efforts to debate and address specific aspects of the ACA versus a full repeal.
Meanwhile, employers continue to wonder how any of the potential changes will impact them and their employees. Here’s our guide to navigating key issues within these evolving market dynamics:
First and foremost, for our employer-sponsored plans and their employees, many aspects of the ACA being discussed in Congress have little impact on employer-sponsored plans. Whether it is the viability of state exchanges, Medicaid programs, the individual mandate, or the Children’s Health Insurance Program, changes or even elimination of these items would not have a material direct impact on most group plans. It is the individual plans, representing approximately 7 percent of the overall health care market, that will be directly affected. Yet, an overwhelming 76 percent of the public believes that changes in ACA marketplace premiums will impact everyone who has health insurance. This signifies an opportunity for employers to educate employees and assuage their concerns.
What if Congress eliminates the employer mandate? Will this prompt employers to drop coverage?
Most industry experts recognize that employers offer health plans not because the government says they must, but for numerous other reasons ranging from company culture and philosophy, to employee attraction and retention, to the need to maintain a productive workforce.
Studies show that healthy, positive work environments engender higher rates of employee engagement and their companies benefit from less absenteeism, lower health costs, and greater productivity. And even in today’s environment, it costs an employer far less in penalties than to offer health insurance.
It is always possible the market may one day move away from employer-sponsored health insurance, but if it happens, it will be a slow process. And even then, new approaches and employee health benefit offerings will probably gain traction.
It would be politically unpopular, but let’s say the federal government were to allow for pre-existing condition exclusions in health plans. To counter this, there are state laws that could still limit insurance policies from allowing pre-ex exclusions. But here again, pre-existing condition exclusions are more relevant to individual plans.
Insurance carriers might look to install exclusions in their individual plans to help improve their overall risk pool. With group plans, there are already protections built into the contracts, such as:
But let’s assume pre-existing conditions are reintroduced into group plans. We’ve had these exclusions before and relied on HIPAA rules to protect people in group plans. These rules establish that if a person doesn’t experience a break in group coverage of more than 63 days, then a group plan cannot enforce a pre-existing condition exclusion on that person. So, even with the reintroduction of a pre-ex, people who do not let their group coverage lapse for long would be protected against a pre-ex as they change jobs.
At this point, you may ask, is there nothing to worry about at all as a group plan?
Our advice is to keep an eye on things, without overreacting, paying particular attention to the finer details. For example, there are tax issues that will be important to watch. Today when an employer pays a large part of a medical plan premium for an employee’s coverage, that amount is not taxable income to the employee. There are efforts in Washington to cap that exclusion from income. This could have a very broad impact on employees as well as the employer’s role in providing benefits.
In addition, the “Cadillac tax” — a 40 percent tax on plans that exceed certain premium levels — is scheduled for rollout in 2020. According to some estimates, by 2022 this tax would impact nearly half of all employer plans. But with both unions and large employer groups opposed to it, political opposition is coming from both sides of the aisle. Also keep in mind that although this has been recognized as a potential revenue generator, it has already been delayed a few years
Is there anything employers should welcome as far as potential changes to the ACA?
One thing we would like to see is removal of the ACA annual reporting burden on employers with 50-plus employees. It’s a lot of work, a lot of expense, and just doesn’t seem to add enough value.
With most of the U.S. population unaware that most of the recently debated ACA issues affect only those who purchase their own health insurance, many of your employees are probably anxious about how changes in the ACA will impact them personally. Clear communications to ease their concerns and underscore your company’s investment in them are an opportunity to build up morale. Approaches from quick bullet-point emails to Q&A forums encourage fluid communication and engender trust.
We’ve created this infographic you can share to help educate them: “3 Things Employees Should Know About the Affordable Care Act.”
Knowing that attracting, engaging, and retaining the best candidates and employees will be important as competition for talent increases, consider the specific implications for your industry and for your organization. Staying abreast of new developments in health care and thinking creatively about your benefits can help you brand your company as an employer of choice. Don’t forget to amplify your efforts. Tell your story effectively on your company website, through social media content, and by empowering your employees to do the same.
As a starting point, our team can help you understand what the penalty would mean for your company if this measure were in place today. We’d start by evaluating plans that are subject to the rule (some are surprising, like FSAs and HSAs) and do the math. If we anticipate that you’ll be impacted, it’s good to start introducing lower-cost plan alternatives (not replacements yet) and educating stakeholders in the organization (leaders, employees, unions, etc.) on potential issues so they are not shocked if changes need to be made in a couple of years.
Our benefits experts will continue to follow new ACA developments and implications, serving as a trusted resource and guide to our clients. We are available to meet in person to provide an impact analysis and welcome the opportunity to advise you on the challenges you face.