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As the Dust Settles

A path forward for employers after health care reform

By Theresa Gee

Page 54

It has been several years since the Affordable Care Act (ACA) was passed and now the biggest parts of health care reform are upon us. All along, employers have been re-examining their role in health care while also evaluating the impact of the various administrative requirements, mandates and fees. In addition, new tax provisions are changing the economics of how to move forward in this new environment. Since the presidential election, new regulatory guidance is being issued almost weekly and only now are the implications of ACA becoming clear. As the dust settles, employers should step back and plan their path forward:

Develop a Longer Term Health Care Benefits Strategy: While the ACA is adding numerous restrictions on how employers can manage their plans, there is clearly a need for employers to manage aggressively within those boundaries. While cost pressure has always made this a priority, the potential for the 40 percent excise tax on high cost plans (commonly known as the “Cadillac Plan Tax”) will require employers to be even more aggressive in planning and managing costs in the future.

Accelerate Employee Ownership: Employers should evaluate their current health and health care initiatives and develop a strategy requiring employees to take greater ownership of their health and health care needs. Do your employees have  skin in the game? Moving beyond the initial focus on education and support, some employers are now requiring engagement and positive outcomes from the programs in order to receive the current level of company contributions or cost sharing. The ACA expands the employers’ ability to use these incentives to drive behaviors and use financial incentives to support the desired outcomes.

Reassess Administration and Compliance: The ACA has brought over 2,400 pages of legislation that has significantly increased complexity of the administration of health care benefits for employers and is creating new communication and documentation requirements that will increase an employer’s administrative burden. When the state health insurance exchanges become operational, there are likely to be a whole new set of administrative issues that arise for employers, including appealing penalty assessments and providing proof of employee coverage. Employers also need to work proactively with their external vendors, health plans and insurance companies as well as eligibility and enrollment vendors, to assess their readiness to comply and fulfill their administrative requirements in a cost efficient manner.

Evaluate and Position for Defined Contribution: The emergence of public and private health care exchanges in the marketplace have the potential to radically  change the game for employers. Employers should take a fresh look at understanding these new solutions and how they could potentially transform their future role in the delivery of health care coverage. Such a review will necessitate a detailed evaluation of financing, cost management, consumer support and tax aspects of each new  defined contribution’ solution.

Employers will not just need to decide to  “pay or play” in this new health care environment but rather how to play and when to pay.” These decisions are increasingly complex with a longer-term focus centered on increasing employee ownership while taking tactical decisions to meet new requirements and strategic decisions around your long-term role. As the health care marketplace is evolving at an unprecedented pace, be sure you — and your benefit plans ­— are ready.

PricewaterhouseCoopers is the world’s largest professional services firm focusing on audit and assurance, tax and consulting services. Theresa Gee is a principal of human resource services for PwC.