Health Care Reform: What Employers Need to Know
With President Obama securing a second term in office and Republicans lacking the votes to overturn a presidential veto, health care reform is moving full steam ahead. The much-anticipated regulations associated with health care reform likely will be issued soon. With repeal off the table and the awaited regulatory clarification of the law’s ambiguity at hand, it is time to embrace and plan for reform.
What You Need to Do
Planning needs to begin as soon as possible so businesses can understand the impact of reform on cash flow. Gathering census data and incorporating various assumptions into a “what-if” analysis can be a lengthy process. Modeling the impact of increased enrollment and simulating pay-or-play scenarios likely will produce potential plan design changes aimed at controlling costs. These analytical steps are critical to addressing the effect of health care reform.
Reform requires a multitude of decisions. Businesses are confronted with the opportunity to retain their current health plan if the plan is eligible for “grandfathered” status. Such status may provide businesses the opportunity to adopt a wait-and-see approach to some aspects of reform. Other businesses may discover that not providing health insurance and paying penalties on the discontinued benefits is a pure numbers analysis, but any pure numbers analysis needs to incorporate the effects on employee morale and the cost of income replacement.
A third possibility could be a partial play, where a business continues to offer health benefits to all employees but only makes them affordable to some. Limiting plan costs could be less expensive than total compliance. Reform’s implications to business models also need to be assessed—impact on workforce retention and recruiting, influence on community image, effect on competitiveness, etc.
Who Can Offer Assistance
Given the complexity of the reform, businesses should consider soliciting professional assistance. Insurance advisors and brokers can help businesses evaluate plan changes and their costs. CPAs can assist with cash flow analysis, interpret IRS regulations on reform and provide guidance on the tax aspects of health care reform. Legal counsel will play an essential role with opinions on Department of Labor, IRS, Department of Health and Human Services and ERISA laws.
Being prepared is the key to successfully navigating these complex new rules. Do not be caught unaware of deadlines or potential cash flow implications of the reform. Schedule a meeting with your insurance advisor or broker as soon as possible.
If you need additional information on the impact of reform on your organization, fill out the form below. A BKD professional will respond soon to your inquiry.