Despite questions over the upcoming election’s impact on employer-sponsored health insurance in this country, most advisers are advising their clients to continue with business as usual for their active population, but starting to think about the pre-65 retiree population.
For active employees, it is business as usual. “I’m not telling anyone to wait and see and I’ve never found that is a good thing to do,” says Alan Schulman, relationship manager at The Meltzer Group in Bethesda, Md.
As employers are entering the busy renewal season, renewals must take place as they come up. “You don’t have the luxury of waiting to see what unfolds,” in the political world, Schulman explains.
John Grosso, consulting actuary at Aon Hewitt, agrees that it is business as usual with a focus on managing and maintaining costs, Affordable Care Act compliance and Rx drug costs. “It is full speed ahead,” he says. “I don’t expect to see any dramatic changes in the short-term. It will be incremental up to the election.”
In the interim, Schulman and Grosso are telling clients they will let them know should any dramatic changes take place and they need to act.
Even after the swearing in of the new president on Jan. 20, there will not be any dramatic changes at first, Grosso explains. “The focus has been on the retiree side,” he says, as opposed to the active population.
“It [will] not be that drastic a change as people make it out to be, with the caveat of the ACA,” adds Schulman, who serves as a lobbyist for insurance firms based in Maryland and the Northern Virginia area. “That has just unraveled things and I don’t know if it will be same with [Hillary] Clinton because she has some changes. [Donald] Trump says repeal, which I do not think is viable, but he will make some changes.”
While there is not much change expected in the active employee space, for pre-65 retirees, it is important that employers track the health insurance market and ACA marketplaces to see what is taking place.
“Track, but don’t move the retiree population just yet,” Grosso says. “The [insurance] market is evolving. It is evolving and not stable. The market could look different tomorrow.”
A recent Aon survey found that in light of the ACA plan and premium volatility and the upcoming election, only 13% of employers plan to move forward with their pre-65 strategies regardless of the election’s outcome.
Aon’s survey of 70 employers conducted in mid-August found that just 9% of employers plan to move their pre-65 retiree population to the individual market ― most likely accompanied by an employer subsidy ― and 4% plan to eliminate pre-65 retiree coverage altogether, regardless of the election’s outcome.
Thirty percent of employers said they will delay making any pre-65 strategy changes until after the election, and more than half (58%) are uncertain whether their retiree health care strategy will change.
“Federal healthcare reform has created the impetus for change to enable employers to consider new solutions like individual market, exchange-based strategies to help support retiree benefits,” says Jane Funk, senior vice president and retiree exchange leader at Aon Hewitt. “While many employers are reviewing their health care strategies for pre-65 retirees, many are holding off on making any major changes given the uncertainty surrounding the election’s outcome and what the impact may be on the Affordable Care Act, public exchanges, Medicare and Medicaid.”
The election creates the momentum to sit tight, Grosso adds. “Nobody expects changes right away, regardless of who wins the election and where he House and Senate go,” he says.
Either way, plan sponsors need an adviser to help them understand the issues and build a strategy. “The ACA marketplaces are complex, they are evolving and local-focused,” he says. “Without question, plan sponsors need an adviser to [help them] understand and take advantage of it.”
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