By Kimberly J. Ruppel
This article originally appeared in the 2nd Quarter edition of ERISA Legal News.
National healthcare has been the subject of political discussion since former President Theodore Roosevelt’s campaign in the 1912 election (which he lost to Woodrow Wilson). The Patient Protection and Affordable Care Act (the “ACA”) is the most significant revision of the national healthcare system since the creation of Medicare in the 1960s. Last month’s Supreme Court ruling upholding the individual mandate of the ACA (among other findings) is the latest on this important and divisive topic, but is not the final word by any measure.
Now that the Court has decided that the ACA will remain effective (in large part), employers and plan sponsors should focus on compliance efforts such as drafting and providing uniform benefit summary disclosures for coverage options, and updating payroll deductions to increase the hospital insurance tax and Medicare withholding tax to executives with income greater than $200,000. Further, beginning next year, employee flexible spending accounts will be limited to $2,500, which is generally lower than many plans currently allow. Also, as of next year, employers can no longer offer additional benefits only to highly compensated employees. Although larger employers may have already begun to implement some of these ACA provisions, smaller employers with less administrative resources may only now be focusing on these mandates.
Some benefits consultants predict that in order to help control rising health care costs and still comply with the ACA, employers may consider moving away from traditional defined benefit plans and toward defined contribution plans instead, to offer employees a fixed amount of money to use toward health care costs.
The Court’s ruling regarding expansion of Medicaid will affect multi-state employers with insured health benefit plans whose participants may have a range of options depending on the exchange offered in their respective state. Yet, those employers may also realize health care cost savings due to some employees dropping out of the employer provided plan and qualifying for Medicaid, lower insurance rates due to increased competition for state exchange coverage, or lower agent or broker commission rates.
The recent ruling is surely not the final word on this topic. While employers and plan sponsors may be immune from some of the insurance-related requirements, much of the law’s requirements affect self-funded plans as well. The results of the election this Fall will likely also bring further changes to healthcare reform. However, in order to comply with deadlines set by the ACA, employers and plan sponsors are advised to begin to act now.
Click here to read more articles from the 2nd Quarter edition of ERISA Legal News.
