"Health care reform is overrated," a broker responded flippantly to his (now former) employer-client after the employer initiated the call. "I'll email you a one-page cheat sheet." The client had reached out to his broker following a two-hour presentation about the impact of health care reform from the broker's competitor. This was the same broker who, for the last two years, had faxed over the client's renewal and had delegated the servicing of the employees to the client's bookkeeper. Shaking his head, the client hung up the phone, then dialed his broker's competitor and moved the business.
Consulting firms around the nation have deployed significant resources and compliance teams to help clients proactively manage the strategic, financial and operational impact of the Patient Protection and Affordable Care Act. There are significant penalties for noncompliance so it is important that employers keep up with the regulations. In addition, employers may see increased enrollment as employees seek to comply with the individual mandate, which requires coverage.
Eligibility for coverage is one area that employers need to assess. PPACA defines a full-time employee as working 30 hours per week. Many employers currently set their eligibility threshold at a higher level, such as 35 or 40 hours a week.
"We could potentially have 40 new enrollees on our plan," pointed out one human resources executive at a recent health care reform seminar, as she weighed the cost impact.
If your plan defines eligibility as greater than 30 hours a week or excludes certain classes of employees (for example, a nine-month noncertified employee at a school vs. a 12-month employee), this is the time to assess the impact of the legislation and determine an action plan. Here's a checklist to get you started:
1. Review employees who currently waive the plan. Model potential plan costs if these employees join the health plan.
2. Review employees who are currently ineligible due to higher eligibillity thresholds (greater than 30 hours per week.) Assess the financial impact of newly eligible employees joining the health plan.
3. Review variable-hour employees. If they exceed an average of 30 hours a week during the measurement period, they may be eligible for benefits.
4. Are partial-year employees eligible for coverage? (i.e., nine-month employees who don't work during the summer months?) If currently excluded, assess potential impact if they exceed 30 hours per week.
5. Review seasonal employees. Do they exceed 120 days per year? They may be eligible for benefits.
There are many other components to developing a strategic approach to health care reform. Look for a broker that offers a proprietary financial modeling tool that can help your company determine a cost-effective strategy for the future.
Contributing Editor Laurie S. Miller is area senior vice president with Gallagher Benefit Services (formerly Miller Buettner & Parrott, Inc.) She can be reached at firstname.lastname@example.org.
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