Commentary: Congratulations on making it through one of the most legally and administratively challenging years in employee benefits history. But, as you know, employee benefits never sleep. Here is the 2016 ABC’s of employee benefits – what I call the annual “just tell me what I need to do” list.
ACA reporting aftermath. Ensure you keep all the documentation supporting the reporting decisions made (e.g., employee benefits eligibility coding, alternative reporting methods, transitional relief, control group decisions, etc.) and profusely thank everyone who helped you complete this arduous task!
Benefit information websites to visit. Benefits information – good, bad, and ugly – is everywhere you look these days. Here are opportunities to obtain free credible information: Employee Benefit News, BenefitsLink and government ACA websites such as healthcare.gov and the DOL’s healthcare reform site.
Consider self-insurance (even if you have fewer than 1,000 employees.) According to the 2015 PwC Health and Well-being Touchstone Survey, 66% of employers with 500-1,000 employees are self-insured, up from 59% in 2014. This is not surprising given the cost impact of the ACA, state taxes, and state mandates on fully insured plans. Perform a cost/benefit analysis to determine if self-funding is right for your organization. Don’t forget to calculate the expected ACA fees (PCORI and transitional reinsurance) and “cost” of performing extra reporting responsibilities.
Develop an annual compliance calendar. Given multiple employee benefit legal requirements throughout the year, create an annual compliance calendar so you can keep track of what you must comply with and when. Major requirements will fall in the following areas: ERISA, ACA, COBRA, HIPAA, etc.
Execute appropriate benefit strategies. Re-focus on determining strategies to control rising organizational healthcare costs. According to the 2015 Towers Watson/NBGH Best Practices in Health Care Employer Survey, the top priorities of employers’ healthcare activities over the next three years include: increasing focus on employee well-being, including health, financial and workplace experience (96%); evaluating health and pharmacy plan design strategy (95%); and developing/enhancing a workplace culture where employees are responsible for their health (94%).
Familiarize yourself with ERISA section 510. Lawsuits are already being filed by employees alleging that their employer reduced their hours to keep them from having health insurance coverage. To minimize your risk and exposure, consult counsel before taking any dramatic actions that will affect employee benefits eligibility.
Growing interest in benefits technology. Employee Benefit News’ second annual technology survey indicates that 38% of respondents plan to increase their spending on employee benefits technology next year, with 44% having already increased their spending from 2014 to 2015. Much of that spending is directed toward new employee portals and front-end systems to better integrate and utilize various benefits functionalities (health, retirement, voluntary benefits and more).
Here comes HIPAA. The U.S. Department of Health and Human Services Office of Civil Rights has announced a new phase of covered entity and business associate audits for compliance with the privacy and security rules under HIPAA in the fourth quarter of 2015 and into 2016. If you haven’t already, ensure that your organization is complying with the appropriate HIPAA privacy and security rules (policies and procedures, privacy notice, training, etc.). A HIPAA breach can be very expensive and embarrassing to your organization.
Impact of U.S. Supreme Court ruling on same-sex marriage. The U.S. Supreme Court ruled in Obergefell v. Hodges that the Constitution guarantees same-sex couples the right to marry. Consult legal counsel and your health insurance carriers to discuss any legal and business decisions (plan eligibility, taxation, documentation, communication, etc.) as a result of this ruling, including whether to offer domestic partner benefits into the future.
Jury still out on private exchanges. According to the Deloitte Center for Health Solutions 2015 Survey of U.S. Employers, 89% of respondents have not moved to a private exchange. However, 30% are interested and early adopters feel that private exchanges make it easier to offer a defined premium approach (62%), simplify their company’s role in benefits administration (60%), and improve access to broader physician/hospital networks (57%). While a private exchange may ultimately not be the right fit for your organization, the value-add promulgated by the adopters provide enough reason to consider performing a pros/cons analysis.
Keep the Cadillac tax in mind. According to the IFEBP 2015 Employer-Sponsored Health Care: ACA's Impact Survey, 34% of employers, up from 24.5% in 2014, have started taking action to avoid triggering the 2018 Cadillac tax. Actions include moving to a CDHP (52.9%), reducing benefits (36.9%), and adopting wellness and preventive initiatives (28.3%). Run a financial projection to determine if your organization is expected to be impacted by the Cadillac tax. If you expect to be impacted, consider cost mitigation strategies and keep an eye out for upcoming proposed regulations. Although the effective date for this tax was recently delayed for two years, keep it on your radar.
Learn financial wellness. Financial wellness is the new buzz phrase in employee benefits and 93% of employers are very or moderately likely to create or broaden their efforts on financial wellness topics in a manner that extends beyond retirement decisions according to Aon Hewitt's 2015 Hot Topics in Retirement Survey. Such topics include basics of financial markets, healthcare planning, financial planning, debt management, budgeting, and saving for life stages. Given employee interest, look into which topic/s will provide the greatest value-add and work with your current retirement provider to lead financial wellness meetings.
Make the business case for help. Now and over the next few years, ACA administrative requirements are going to become unmanageable for one department/person to handle on their own (ACA benefits eligibility measurement/tracking, IRS reporting requirements, addressing Exchange/IRS appeal letters, new SBC for 2017, etc.). In fact, according to the IFEBP 2015 Employer-Sponsored Health Care: ACA's Impact Survey, employers say their biggest challenge isn't cost (20.6%), but rather administrative issues (56.9%). Given significant penalties for non-compliance, engage help as soon as possible, especially from your broker/consultant and internal departments (payroll, IT, communications).
Notify your CFO. It’s a whole new world of corporate healthcare costs. Whereas costs have historically been based on trend and experience, the cost impact of the ACA (new employee eligibility, fees, etc.) and internal/external support resources (consultants, third-party vendors) must now be figured in. Determine your 2016 costs and discuss them with your CFO in order to avoid any surprises.
Obey state and local laws. With so much attention being paid to ACA compliance, it's easy to lose sight of the fact that some states and cities are introducing legislation affecting employee benefits, especially paid sick leave laws. Ensure that you have the means to learn and comply with such legislation.
Prepare for telehealth-mania. Seventy-four percent of employers plan to offer telehealth this year (exchange of medical information to improve health using two-way video, email, smartphones, etc.) in states where it is legal, up from 48% last year, according to the National Business Group on Health's Large Employers’ Health Plan Design Survey. Given the costs associated with in-person visits and the upcoming Cadillac tax, this may be a great opportunity for your organization to mitigate health insurance costs.
Questions galore. Given the complexity of the ACA, employees are confused and questions will increase. According to the IFEBP 2015 Employer-Sponsored Health Care: ACA's Impact Survey, common questions benefit managers should be prepared to answer include: How will our benefits change? Is this benefits change because of the ACA? How does the law affect me? Do I need to do anything (tax-related) or otherwise? What will this cost me? Why are my costs going up? Remind employees that you (and not the news, neighbors, or relatives) are in the best position to answer their questions, especially at open enrollment and employee benefit meetings. When talking about the ACA with employees, however, make sure you are not providing legal or tax advice.
Ramp up proactive employee communication. Given the ACA individual mandate and exchange opportunities, communicate proactively with employees in key situations that could have a negative effect on them or the organization (e.g., remind newly benefits-eligible employees to determine their exchange subsidy eligibility, require employees who decline benefits coverage to sign a waiver, ensure employees know if and when they are eligible for employee benefits or not, etc.).
Study the ACA. In addition to the obvious compliance reasons, the ACA’s requirements will have a significant impact on current and future benefit program costs (plan design, eligibility, fees, etc.). Thus, it’s critical to learn and understand the ACA to allow you to develop appropriate short- and long-term cost control strategies.
Tackle your low-hanging employee benefits compliance fruit. Between the ACA reporting requirements (W-2 cost of benefits, IRS reporting) and payment of new fees (PCORI, transitional reinsurance), the federal government’s magnifying glass over your benefits program has increased significantly, thus increasing its exposure to an audit. If the government arrives at your organization, they may inquire about non-ACA benefits compliance including plan documentation (ERISA, Section 125), HIPAA (policies and procedures, training), non-discrimination testing, wellness programs, etc. If your organization is not compliant in these areas, they may stay for a while.
Understand employee benefits eligibility. Ensure you truly understand how the employee benefits eligibility rules work and are applying them accurately because there are three policing functions: the federal government, employees, and tax advisers through the ACA’s IRS reporting process. You could be subject to significant penalties if you don’t offer health insurance coverage to the appropriate employees. This is especially important for 2016 where the offer of benefits coverage threshold increases from 70% to 95% of full-time employees.
Visualize the light at the end of the tunnel. There’s a good chance that over the past five years you have done more heavy lifting in the employee benefits space than you have in your entire career. Between learning and implementing the ever-changing ACA, coupled with managing your pre-ACA benefit responsibilities, you should be very proud of the work you have accomplished. The good news is that there is light at end of the tunnel in that the ACA implementation requirements should slow down over the next year allowing you to focus on the strategy side of this new world of employee benefits.
Write your broker/consultant’s job description. In this new world of employee benefits, task your broker/consultant with providing hands-on support in the following areas: compliance, communications, analytics, administration, and strategic solutions. If they are unable to meet your wants, needs and expectations, find a new one that will. It’s a buyer’s market.
X-amine new notices, regulations, instructions, etc. There was a good chance that the ACA would roar like a lion once the U.S. Supreme Court decided King v. Burwell and it certainly has. We are seeing compliance regulations being issued on a continuous basis with no end in sight. Ensure that you have external resources in place to make you aware of any new information affecting your health insurance plan.
Year of new vendors and services. When it comes to determining benefits eligibility and completing IRS ACA reporting, new vendors have entered the market. If you decide to use a third-party vendor, perform a thorough vetting process. Key areas to cover include: determining exactly what they are going to do for your organization, gaining assurance in writing that they will meet key IRS compliance dates, learning how they will collect necessary information from all sources, and determining the accessibility of your dedicated support team.
Zero in on employee well-being. According to the 2015 PwC Health and Well-being Touchstone Survey, more employers (73%, up from 71% in 2014) have introduced wellness programs to mitigate the impact of their major cost drivers and more CFOs are willing to listen. Eighty-seven percent of employers with wellness programs offer incentives; of those, 27% offer cash incentives of at least $100. Determine what type of wellness program can positively impact your key cost drivers and then take the appropriate implementation action.
Ed Bray, J.D., is senior vice president of compliance with Ascension Benefits.
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