Most Haven't Addressed Looming Health Reform Requirements

News Updates

Stay on track with health care reform's approaching deadlines, or risk paying the penalties.  

Immediately following the U.S. Supreme Court’s June 2012 decision upholding most of the health care reform law, Mercer polled more than 4,000 U.S. employers. The majority said they had been waiting for the court's decision before developing a strategy to respond to the law’s provisions slated to go into effect in 2014 and beyond. While 40 percent said they will begin taking action now that the court has ruled, another 16 percent said they will continue to wait until after the November 2012 elections.

Although the law still faces a contentious political outlook, employers should stay on track in their efforts to comply with the law as enacted or else they may face penalties, advises Mercer, an HR consultancy.

Employers must act quickly to implement new requirements for 2012 and 2013, such as:

Expanded Eligibility Requirements

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 respondents (28 percent) 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—also is expected to increase the rolls of the insured for many employers. Nearly one-third (29 percent) of respondents said this will be a significant challenge, especially because other provisions of the law will limit the amount of health plan costs employers can pass along to employees through higher premiums or deductibles.

'Cadillac' Tax on High-Cost Plans

Still, the provision that has the most employers worried—47 percent of respondents—is the so-called "Cadillac" 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.”

Aggressive Cost-Management Strategies

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 percent—agreed. Employer actions were one factor that helped to slow health benefit cost growth in 2011 relative to 2010.

The survey suggests this trend will continue. Asked whether they planned to be more aggressive about managing plan costs going forward now that health reform has been upheld, 54 percent said yes and another 41 percent indicated they were already taking aggressive action to manage expenses.

Stephen Miller, CEBS, is an online editor/manager for SHRM. To read the original article, please click here.