Is your alarm going off?

By Wayne Mertel

Time is ticking away until the next (and most important) date for implementation of the Affordable Care Act (ACA), commonly referred to as health care reform. On Jan. 1, 2014 (on Oct. 1, 2013, employees must be notified), many of the most impactful requirements regarding the mandates, plan availability, affordability and penalty/taxes associated with obtaining health insurance will become reality.

Reality is the operative term. For many businesses, the law and its potential impact have affected businesses something like an alarm clock in the morning; you keep hitting the “snooze” button until reality says you’ve got to get up. First we waited to see if the law would receive the necessary votes. Then we waited to see if the Supreme Court would uphold the challenges to its legality. Then we waited for the outcome of the presidential election. Then there was more waiting to see if fiscal cliff negotiations would carve into the law’s core. And … now we wait for more clarity to the rules and the implementation by the health insurance companies.

And the ticking continues.

Those mornings when you hit the snooze button a few too many times can ruin an entire day. Further complacency regarding health care reform may find you scrambling in the future, and could be costly. Most businesses are now coming around to the idea that it’s time to face the day—and the health insurance. But some businesses are better prepared than others.

The law takes shape

With most of the challenges to the law now behind us, the rule writers are now releasing a multitude of new clarifications and requests for comments from informed sources to give the law its shape. Ultimately, there will likely be more than 100,000 written pages that in some way will define the details. If you were anticipating a simple, straightforward program, this probably won’t be it.

Regardless of your political affiliation, it’s hard to argue that the changes haven’t brought some positives; the removal of pre-existing conditions, the elimination of lifetime benefit maximums and the ability for children to stay on their parents’ plan to age 26, to name a few. But none of these gains comes without cost, and we are just beginning to understand what that means.

Since 2010, when the law was adopted, there’s been a mountain of information regarding its basic provisions. The Digital Insurance website offers a practical and comprehensive employer handbook on the law’s provisions. If you’d like a refresher, there’s a cute and mildly entertaining illustrated explanation, “Health Reform Hits Main Street” on YouTube, from the Henry J. Kaiser Family Foundation.

Additional information is issued almost daily. We now know generally what the plans are required to cover. Plan deductibles in the small group market are targeted around $2,000 for individuals and $4,000 for families, and individual cost-sharing limits set around $5,950, and families at $11,900.

State exchanges will offer plans based upon the “actuarial value” of the health plan’s design relative to the cost shared by the insured with the insurance company. With this as a target and as further definition of what’s to be covered, insurance companies are just now beginning to gain the information necessary to begin designing qualifying plans and, ultimately, their pricing strategies—which we probably won’t see until the third quarter of this year.

While employers ask, “What’s this going to cost me and my employees?”, it’s still premature to expect answers until the insurers provide specifics. In an editorial by George Will in the Jan. 18 Washington Post (“The time tomb in Obamacare?”), he mentions a projection that minimum coverage for individuals might cost $400 per month. That would be a national average; in many areas in the country that amount might be less, but for many more it could be substantially higher.

So now what?

If you’re in business, now’s the time to explore your options. The open enrollment period for plans with effective dates of Jan. 1, 2014, begins in October of this year.

Here’s a partial list of important items and questions that you should be acting on now:

• Will our business be required to offer coverage or pay a penalty? You may not consider your business a “large employer,” but the law’s provisions might.
• If our business is required to offer coverage, who do we need to offer it to? Coverage must be offered to eligible full-time employees. Recent rules provide direction on who you count, but there are many variables that a business can use. Be sure you know about “look back,” administrative and measurement periods, and pay attention to them in 2013. You also should know what the law considers “affordable” to employees.
• Should we consider paying a penalty instead of offering qualifying coverage? Many don’t understand that this decision means you offer coverage to no one—not even the business owners. This is more than an economic decision. Offering qualifying coverage may affect your business’ recruiting and retention of talent, and your ability to win certain business contracts.
• Understand that the solution will be your solution. Many employers want a simple, logical answer. Maybe an industry or association-based solution? Maybe a solution based on your location or size? Long-term answers may take time to develop. The multitude of adjustments that will be made by the government, states and insurers will identify the long-term answers. Don’t rush into an unproven solution that may not be sustainable.
• What should we be telling employees? You can’t possibly overcommunicate with employees at this point. There’s a tremendous amount of misinformation out there. Bring them into the loop about how the law will affect them and their families.
• Consider implementing new benefits options now. It’s an opportunity to develop positives in the midst of the current uncertainty. Employees feel they have control when they have choices. Introducing coverage options where many are underinsured, such as life and disability insurance and voluntary coverage options, can have minimal cost to the company but be substantial pluses to employees and their families.
• Evaluate your advisor(s). The complexity of health care reform has had a tremendous impact on the professionals who have traditionally helped employers with their employee benefits. Many insurance brokers now find themselves substantially empty-handed when advising their clients.

With expected consolidation in this market, choose a consultant who can help you and your employees understand your options, keep you abreast and compliant with the law and other future changes, and has substantial scale and resources to work on your behalf. Ask your advisors what resources they have for wellness plans, “private” exchanges, defined contribution strategies, proprietary benefits options and administrative tools to support you and your employees.

Are you ready?

The ticking sound is back, and the alarm is sounding.

In that editorial by George Will, he suggests that the ticking sound might be a time bomb associated with so-called “Obamacare” that is fueled by affordability. While the Affordable Care Act may ultimately prove to be a game-changer in our ability to gain control of health care costs long-term—about the only thing certain about the immediate future is confusion, complexity and rising costs. At least initially, the “Affordable” in the ACA might be a misnomer for many.

Are you awake yet?

Wayne Mertel is vice president of integrated solutions for Atlanta, Ga.-based Digital Insurance, with more than 15 years of experience in communicating insurance concepts to brokers, employers and employees. ATA has partnered with Digital Insurance to help U.S. members with their employee benefit programs. Contact Wayne Mertel at wmertel@digitalinsurance.com.