by Norman F. Meullen Jr., CEBS, President, Benefits Retain People
On March 30, President Obama signed into law Patient Protection and Affordable Care Act of 2010 (PPACA). Since then all of us in the benefits business have spent countless hours trying to determine how various aspects of the law pertain to our clients on both an immediate as well as long-term strategic impact. Politics aside, this law will create immediate changes for companies of all sizes in both benefit offerings and financial implications of those offerings. The true financial impact will not be determined until further down the curve, but the jury is certainly out on value to American business competitively.
Many questions are still to be answered:
- Will CDHP offerings survive the definition of “minimal acceptable coverage”
- What defines a correctly designed “improved appeals process”
- How will you be able to charge for new extended health coverage for “nonstudent” dependents
As a plan sponsor there are several immediate issues (within six months of signing) that you need to deal with to comply with the new law. All of these are 2010 compliance requirements that will require your attention.
- Extended Coverage for Young Adults—Group health plans that provide dependent coverage for children must make coverage available to adult children up to age 26. Dependents of the adult child do not need to be covered.
- Elimination of Pre-existing Conditions Exclusions for Children—Group health plans cannot impose pre-existing limitations on coverage for children.
- Coverage for Preventive Health Services—Group health plans can no longer limit coverage or invoke cost sharing on benefits for preventive health services.
- Prohibition of Rescission of Coverage and Notification Requirements—Plans must provide notice for termination of benefits and can’t rescind coverage for medical conditions.
- Removal of Lifetime Benefit Limitations—Plans will no longer be allowed to have Lifetime maximums for health benefits. Annual maximums for specific benefits will be required to be removed by 2014.
- New Nondiscrimination Rules for Fully Insured Plans—Nondiscrimination must be practiced in terms of participation requirements as well as eligibility for benefits.
Beyond these is the impact of the new taxes on your employees for Medicare and the potential income tax credit for small employers and how it needs to be calculated. As a small employer I would suggest you talk to your broker and refer to the IRS website as this credit is not available to all and the calculation is not easily determined.
From a plan sponsor’s perspective, I would recommend you work with your trusted advisers to stay on top of this law. As it evolves I am sure you will deal with more and more bureaucratic requirements that will require changes in how you deal with your benefit offerings. It will also be important to look at the impact of this law on the insurance marketplace in terms of cost, plan design limitations, and reporting obligations. Minimal claim payment ratios will certainly affect potential premiums charged. With these on the horizon it is possible that carriers may react aggressively now in their renewal pricing increases as these could limit their profitability margins when imposed.
In summary, health benefits in the United States are in flux. There are immediate issues for employers that must be dealt with whether you are fully insured or self-funded, large or small, and for profit or not for profit. As more and more of the requirements of the PPACA are rolled out, the true impact on all will become apparent. It is critical that all involved in employee benefits work together to resolve issues and maintain value in the benefits we chose to offer to our workforces.
Norman F. Meullen Jr., president of Benefits Retain People, is one of only 600 people to hold the CEBS Fellows designation. His clients throughout his 30-plus-year career have included Fortune 1000 and privately held corporations. He is recognized as an expert in MEWA, association benefit programs, and ERISA plans. Norman can be reached at 770-576-1953 or norman[at]benefitsretainpeople.com.