5 cost-saving tactics for ACA compliance
April 17, 2014 4:09 PM
1. Avoid the excise tax.
Many employers are already making changes to their medical plans in anticipation of the excise tax in 2018. Also known as the Cadillac tax, its a 40% tax on the value of medical benefits over a set threshold. Organizations likely to hit the threshold have time to plan for a soft landing by phasing in changes to reset benefit cost at a lower level now, Mercer says. The most common strategies are adding in low-cost consumer-directed health plans and eliminating the highest-cost plan offered today.
2. Rethink dependent coverage.
All employers should take a closer look at how they subsidize dependent and spousal coverage, Mercer suggests. Employers are increasingly implementing working spouse provisions that either eliminate coverage for spouses with health insurance offered elsewhere or imposing a surcharge on their coverage. The 2013 Mercer National Survey of Employer-Sponsored Health Plans found 16% of large employers have such a provision, up from 12% in 2012.
3. Consider coverage options for part-time and variable hour employees.
Extending coverage to all employees working 30 or more hours per week will make up a large part of the increase in health benefit spending due to the ACA, Mercer says. Several strategies can be considered to become compliant with the law. They include limiting the number of hours worked for some employees, extending coverage to all eligible employees, adding a low-cost plan for newly eligible employees or simply paying the shared responsibility assessment.
4. Embrace next-generation wellness strategies.
Many employers will add or expand health-management/wellness programs in an effort to reduce health care spending by improving workforce health, Mercer says. The ACA allows employers to increase the value of incentives from 20% to 30% of total plan costs, and up to 50% for tobacco nonuse.
5. Consider a private exchange.
Interest in private health insurance exchanges is growing rapidly, Mercer says. A private exchange allows an employer to better manage costs and deliver flexibility and choice to its workforce. Mercers survey found that one-fourth of all employers are considering switching to a private exchange to deliver benefits to retirees or actives within just two years and nearly half would consider switching within five years.
