Health Care Reform: What You Need to Know
By Becky Saldivar, Silicon Valley Bank
How will health care reform affect your company and your employees? Many employers are embarking on their annual renewals and are facing double-digit increases in their health care costs for 2011. Employers are scrambling for solutions to help offset increases through plan design changes or increasing employee contributions. Finding the right balance between managing costs and employee satisfaction is challenging. It is even more difficult under reform. So how do you begin to navigate through all the complexities and decisions you will need to make regarding your company’s medical plans? You can do a quick assessment to help identify what may be your biggest concerns as you can begin to align your strategy around health care reform.
Know Your Starting Point
- When is your annual renewal? Know when to expect the changes and set up a communication plan. The first wave of changes related to reform begins with your next renewal.
- Is your medical plan fully insured or self-insured? If your plan is fully insured, your medical plan provider will update your plan to comply with the mandatory changes.
If you are self-insured, you will need to understand what changes your plan requires to comply with reform legislation. You may have more choice in redesigning your plan to help offset any increases in your costs due to mandatory reform changes.
- How many of your employees are not participating in your medical plans? In 2014, health exchanges will open to provide coverage for those who are uninsured. If you have employees who are not eligible to participate in your medical plan, you may need to add them to your plan or provide a subsidy/voucher for them to purchase coverage through an exchange.
- How many dependent children are age 19 to age 26 that will be eligible to remain on or join your plan? Your costs may increase due to the addition of newly eligible dependent children.
Know Your Numbers
- How many employees have earnings at or below 400 percent of the Federal Poverty Level (FPL)? Federal Poverty Level in 2010 for an individual is $43,320 and for a family of four is $88,200.
- How much of the monthly premium do you pass along to your employees? If an employees earns below 400 percent of FPL and their contributions for health coverage is between 8 percent and 9.8 percent of household income, they may qualify for Free Choice Vouchers beginning in 2014.
- If you have a pre-tax health care FSA plan, what is the plan limit? Health care FSA limits will be reduced to $2,500 annually beginning in 2013. If your plan limit exceeds this amount, your employees and your company will miss the tax savings for those excess amounts.
Review Your Strategy
- How will you manage year-to-year increases to your health care costs? Will you consider more wellness related and disease management programs to help reduce costs? Will you consider changing the coverage levels in your plan (i.e. higher deductible or co-pays) or change the types of plans you offer (i.e. HMO vs PPO)?
- Do you want to continue to offer coverage or pay to obtain coverage through an exchange? You will need to determine whether you want to “play or pay” and what that will mean to your organization.
- Will you lose your competitive edge when trying to recruit and retain top talent? Cutting your programs or opting to provide coverage through exchanges may affect your company’s ability to recruit and retain top talent.
With so many changes on the horizon, it is important to plan for changes and review your strategy as you navigate through health care reform. Staying informed is key to surviving reform and Healthcare.gov is one resource you may find useful.