For the past two years Willis has been urging employers to start the process of reviewing and revising their group medical plans to comply with the PPACA mandates. As part of this preparation, employers should have been reviewing their total rewards or compensation strategy with respect to their group medical benefits. In that way, employers would be prepared, no matter what the outcome of the Supreme Court ruling, to make reasoned decisions on how to respond. In fact, that planning would be useful even without PPACA.
Nevertheless, many employers implemented the minimum compliance measures and hoped for the rest.
Now that health care reform has survived the Supreme Court’s ruling, employers would be well advised against betting on the outcome of the November elections as the next opportunity to make health care reform go away. Employers need to begin the process of preparing for 2014 now, even in the light of imperfect information.
The administrative mandates and plan design restrictions will greatly limit employer and employee choice and options with respect to group medical plans:
- Employees being limited in the use of Health Flexible Spending Accounts (no more than $2500 per year in salary reductions starting with the 2013 plan year)
- Employers being required to provide voluminous documentation and filings (the new Summary of Benefits and Coverage plus additional filings for the Patient Centered Outcomes fee as two examples).
Employers who did not take steps to start their compliance activities are now faced with the unpleasant act of scrambling to get caught up.
In addition, the pay-or-play mandate becomes effective in 2014. That will take a significant amount of planning and communication as employers consider their options. They may have to make difficult decisions regarding plan design, eligibility, workforce planning and work schedules. Those decisions should be made after due consideration and not on the fly.
Don’t Wait for Election Day
The fall elections may or may not change the political make-up of Congress and the Presidency. Even if there is a full takeover by the Republicans, there is no guarantee that the politicians will make significant changes to PPACA, or at least to the changes that apply to employers. Importantly, even if there are changes, the new Congress and President will not be in a position to make any changes until late in January. That will provide employers a very short window to implement changes for 2014 if needed.
Employers should NOT wait to start considering options. It is true that we do not have perfect information. The regulations have been slow in coming even for current compliance requirements and it will continue to be slow. For at least the next year, ALL decisions will be made with imperfect information. That does not mean employers should freeze up and ignore the changes. It means instead that they need to begin the process, with some alternative options based on different scenarios.
If it turns out that PPACA is completely overturned, employers will benefit from having engaged in important discussions about their group medical plans’ place in their strategic view of compensation so they will be better prepared to take action.
If health care reform remains, employers will be in a much better position to implement plan changes if those issues had been considered and vetted before they get the final rules and those rules will likely come with very little time to implement them.