With the collapses of the GOP’s efforts to repeal and replace the ACA there’s real uncertainty right now around U.S. healthcare policy. And this comes at a time when employer and employee decisions about their 2018 benefit offering need to be made is quickly approaching.
Even in the face of this uncertainty, however, there are steps companies can take now to prepare for the longer term.
Prepare for how the IRS will respond to and enforce policy changes
One key concern is the enforcement of the ACA’s core requirement that companies offer health insurance to employees working over 30 hours per week. Under this requirement, employees that opt out of health insurance are required to pay a tax. What is still unclear, however, is whether or not the Internal Revenue Service will enforce the law as it is currently written.
The Department of Health and Human Services has already started sending notices to employers about such cases, while the IRS has yet to send related tax bills. Given the IRS was already having technical issues calculating taxes under the ACA before the current administration came to power, now it’s unclear if these bills will ever be sent.
Given the ambiguity of the situation, employers should remain compliant and continue to file all ACA-related paperwork until they are explicitly told otherwise by government officials.
Anticipate part-time workers to push for employer-sponsored health insurance
As government spending on healthcare continues to decline, employers should anticipate part-time employees who have previously received subsidies for purchasing health insurance via health exchanges will ask their employers to sponsor their health coverage.
To reduce federal regulation, the administration may seek to reduce or eliminate the subsidies that were put in place by the ACA for coverage purchased on the health exchanges, including withholding a class of payments to insurance companies called cost-sharing reductions (CSRs). This was a common goal of the House bill and the initial bill released by the Senate even while industry experts advise that removing CSRs will destabilize the individual insurance market.
With this in mind, we can expect that if the ACA marketplace collapses, given Trump continues to push for a reduction or elimination of CSRs, part-time and temporary staff will want alternative coverage with discounted insurance that is no longer available on the exchanges.
Evaluate potential changes to benefits if the employer mandate is repealed
Another key aspect of the ACA which is under debate is the requirement that employers with 50+ employees must offer full-time employees health insurance. It’s important for companies to start to consider now how they would react if the employer mandate were repealed.
Offering insurance to fewer employees or switching to less generous plan structures could help reduce employer expenses. Alternatively, employers can offer employees an array of plans, from “skinny” to more comprehensive options.
In the event the employer mandate is repealed, it is likely that many employers would keep their current insurance programs in place, at least in the short term.
This is largely due to offerings on the exchange not being comparable to the group health market.
This is why it would not be beneficial for organizations that employ a large number of low-wage workers to consider dropping insurance on the assumption that their employees will be able to buy subsidized policies on the exchanges.
Consider high-deductible plan options
Many aspects of the replacement bills being brought forth encourage policies that have more limited benefits and higher deductibles than typically offered under current law.
A possible response is to raise contribution limits for health savings accounts, which give participants a way to cover the higher out-of-pocket expenses that come with high-deductible health plans.
In an effort to retain employees and avoid having a mass exodus of workers leaving for companies with richer benefits, employers may choose not to increase the deductibles on their plan offerings. However, given the uncertainty and frequent changes in these policies, benefit managers should be prepared to reduce benefits if these changes to the ACA materialize.
Understanding the tradeoffs between keeping your current benefit design and moving to a plan that offers less coverage or higher deductibles can mean staying ahead of the curve in these uncertain times.
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