As a surprise to many, SCOTUS has upheld, in a 5-4 decision, the constitutionality of the Patient Protection and Affordable Care Act (PPACA), including the individual mandate. The provisions of PPACA implemented until now will remain in effect.
Employers that have been waiting out this ruling will now need to take PPACA provisions seriously and plot strategies to address the increases in costs that will result. Larger employers will need to focus on high deductible options, wellness, and other employee activation strategies. Quality of advice will be imperative and timely communication essential. Be prepared to keep up with the speed of change – because it is going to be moving FAST!
It is clear that the near-term provisions, including the new standardized Summary of Benefits and Coverage and the W-2 reporting requirement, will move forward. On Tuesday Frenkel Benefits held a webinar to help explain these new compliance requirements. Collateral for this webinar can be found on our website, www.frenkelbenefits.com.
Regulators at the federal and state level will need to hit the accelerator hard to meet PPACA provisions that are scheduled to start in the coming months and years.
Creating the state exchanges so that they are ready for the planned January 1, 2014, start date is the biggest challenge. Will they be ready or will the federal default exchange be available in each state should the state exchange not be available? As a result, will the effective date of the 2014 provisions be pushed forward?
What about the issue of transitioning benefits for employee groups that now do not have coverage? How will full time/part time status be determined? It is likely that HHS will allow a more extended transition for these employers, many of whom have been reluctant to take any action until now, so the timing will be tight to implement the sweeping changes required by PPACA.
And, although the law has now been upheld, the many legislative efforts to chip away at specific provisions will continue. Many Republican-controlled states may continue to waffle until after the November elections, hoping that a change in the balance of legislative power will allow modification of the law. House Republicans have already introduced legislation to repeal the law entirely and a repeal vote will be held on July 11, 2012.
In view of the ruling HR Professionals need to focus on health plan design and employee communication. The waiting is over.
Key steps to take NOW:
1. Get ready for 2013, W-2 reporting, Summary of Benefits and Coverage and the Medicare supplemental tax for high earners.
2. Determine whether or not to offer a health plan as a part of an overall total rewards strategy. Think out of the box. Does defined contribution work?
3. Determine if existing plans meet qualifying eligibility and affordability standards.
4. Assess the true organizational costs of either offering or not offering health coverage after 2013. For many organizations, this is not the back of the envelope analysis that used to work.
5. Begin reviewing the implication of the “Cadillac tax” set to begin in 2018.
This s a once in a lifetime chance to reassert the strategic contribution of HR. Don’t let the message manage you!