Although the newly passed health care reform bill exceeds 2,000 pages, employers still lack critical details and guidance to implement many of the unprecedented changes that will affect retired, active and future American workers. For many employers, simply complying and maintaining the status quo is not an option. A recent Towers Watson survey found that nearly three-fourths (71 percent) of employers believe health reform will increase the overall cost of health care services in the United States.
“This bill is a call to action for employers both tactically and strategically,” says Caty Furco, senior consultant and actuary for the health and group benefits practice at Towers Watson. “Employers should evaluate the role of health care within their total rewards strategy and consider long-term strategic changes amid the new regulations.”
Smart Business spoke with Furco about the call to action for employers following the passage of health care reform.
What makes health care implementation challenging?
Many mandates lack specificity and consequently preclude employers from making key decisions. For example, the 2014 pay or play mandate requires employers to provide health coverage for employees working 30 or more hours per week, but the qualification methodology is ambiguous. A government task force is working to fill in the bill’s missing details, but the additional clarity won’t reduce the amount of time and resources it will take to implement these changes. There’s certainly enough information for employers to begin assessing risks, develop a communications strategy and conduct a strategic benefits review so that they’re poised to act as additional details become available.
What should employers consider during strategic reviews?
Tactical decisions always flow from strategy, so this is an opportune time to revisit your company’s benefits philosophy by asking these questions.
- Should the company provide employee health coverage or benefits? What should our role be?
- How are employer-sponsored health benefits viewed internally and externally? How do they influence our market position and talent strategies?
- What is our return on investment for providing employee health care benefits?
- Should total rewards or benefit packages be rebalanced to offset rising health care costs?
What are the critical action items for 2010?
The 2010 regulations surround retiree plans, so employers must communicate coverage changes and implement new accounting rules, resulting from the elimination of the employer’s deduction for Medicare Part D drug coverage. The communications plan should also touch current employees, since many are apprehensive about reform and have heard that their health coverage won’t change. To avoid surprising them down the road, explain that the company is reviewing the law, even if you haven’t worked out all of the specifics. Finally, employers must prepare for 2011 changes, including a reporting mandate, which requires disclosure of the annual value of employee health coverage on W-2s.
