Delay in Health Reform Penalties for Employers Leaves Many Issues Still to Resolve
08 7월 2013 - 10:00PM
Business Wire
While the announcement that employer shared responsibility
penalties will not apply until 2015 was a welcome relief for
employers, addressing the fundamental challenges raised by the
reform law remains a priority. At the heart of the matter is cost.
In the short-term, new fees, plan design changes and the
expectation of additional enrollment will add an estimated 2%-3% or
more to health plan cost in 2014, even if employers table plans to
extend coverage to all employees working 30 or more hours per week.
Longer-term, avoiding the excise tax on high-cost plans slated for
2018 remains a daunting challenge. More than a third of employers
surveyed by Mercer in May said that they were taking steps in 2014
to help bring down cost by 2018.
“The delay will give employers more time to cope with some of
the requirements, but they know it’s no free pass,” said Julio
Portalatin, President and CEO of Mercer. “We expect employers to
stay 100% focused on cost management. Last year they slowed benefit
cost growth to its lowest level in 15 years, but in 2014 they have
the new fees and the likelihood of new enrollment to contend with,
on top of normal medical inflation. As employers evolve their
go-forward benefit strategies, private exchanges, such as Mercer
MarketplaceSM, continue to be a powerful strategy for corporate
cost management and expanded employee customized choice.”
Mercer expects employers to continue to prepare for compliance.
In May, about a fourth of employers surveyed hadn’t yet decided how
they would track and report variable employee work hours and a
third hadn’t decided what look-back period to use. The delay gives
them more time to address these administrative challenges. The
Treasury department has suggested that proposed Reporting and
Disclosure regulations will be provided this summer. However,
public exchanges, which are slated to be operational in 2014, may
still reach out to employers to verify applicant eligibility for
health insurance.
Half of employers surveyed in May were concerned about handling
employee questions about the exchanges, and 43% were concerned
about establishing processes and systems for interacting with
exchanges. Employers must still prepare to address employee
confusion about their need to have health coverage and their
options for coverage – both from their employer and the public
exchanges.
Will employers move ahead with plans to expand
coverage?
According to Mercer’s survey, about a third of employers
currently do not extend coverage to all employees working 30 or
more hours per week, and many of these employers had already made
plans to do so in 2014. “While we don’t know for sure whether these
employers will choose to expand eligibility early, they have
sufficient lead time to decide to hold off,” said Tracy Watts, a
Senior Partner in Mercer’s Washington D.C. office. “Most have not
announced changes yet, and if they have an extensive part-time work
force, the money to be saved by not expanding coverage in 2014
could be considerable.”
The delay creates a “gap year” for employees that had been
enrolled in mini-med plans. These limited coverage plans may not be
offered after the end of 2013 plan years. This may provide another
reason for employers to consider offering a private health exchange
in 2014 -- to allow employees who do not qualify for subsidies in
the public exchanges to purchase lower cost medical plans and
supplemental medical benefits. Because employers don’t have to make
their coverage affordable for another year, employers can choose
whether, or how much, to contribute to the cost of coverage.
Mercer’s private exchange, Mercer Marketplace, offers several
types of supplemental medical benefits, accident insurance,
critical illness insurance, and hospital indemnity, as well as many
other lines of coverage. It also provides a platform for employers
to offer a range of medical plans, including lower cost
consumer-directed health plans, which many employers see as
critical to holding down cost in the face of rising enrollment and
avoiding the excise tax in 2018.
“Offering employees lower cost plans through private exchanges
is one way employers can reset plan value while giving employees
the option to buy up for richer coverage,” said Ms. Watts.
“Creative cost management is going to be a fact of life under
reform, and the delay doesn’t change that.”
About Mercer
Mercer is a global consulting leader in talent, health,
retirement and investments. Mercer helps clients around the world
advance the health, wealth and performance of their most vital
asset – their people. Mercer’s 20,000 employees are based in more
than 40 countries. Mercer is a wholly owned subsidiary of Marsh
& McLennan Companies (NYSE: MMC), a global team of professional
services companies offering clients advice and solutions in the
areas of risk, strategy and human capital. With 53,000 employees
worldwide and annual revenue exceeding $10 billion, Marsh &
McLennan Companies is also the parent company of Marsh, a global
leader in insurance broking and risk management; Guy Carpenter, a
global leader in providing risk and reinsurance intermediary
services; and Oliver Wyman, a global leader in management
consulting. For more information, visit www.mercer.com. Follow
Mercer on Twitter @MercerInsights.
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