Is 2011 a pivotal year?
Employers will definitely be impacted by 2011 mandates, including:
- Coverage extended to adult children up to age 26
- Elimination of lifetime health benefit caps with restricted annual limits
- Elimination of pre-existing exclusions for those 18 and younger
If your company offers retiree health coverage, be aware that 2011 begins a three-year initiative to lower provider reimbursements through Medicare Advantage plans. This could diminish provider participation and plan availability, ultimately forcing retirees into more costly plans. Employers will need to closely monitor renewals and the underlying assumptions used to develop 2011 premium rates.
Which of the remaining mandates will have the greatest impact on employers?
Major changes occur in 2014 and include: the introduction of the pay or play mandate and employee free-choice vouchers, automatic enrollment for employees, restrictions on coverage waiting periods and new reporting requirements. The wild card in 2014 involves new fees on health insurers, which seemingly will be passed along to purchasers in the form of higher premiums. The looming excise tax on high-cost group health plans beginning in 2018 requires employers to immediately forecast future increases and possibly devise a strategy to avoid the tax by altering plan designs. Every company’s situation is unique and their response to reform will vary. It is imperative to stay abreast of emerging guidance through regular visits to Web sites such as www.towerswatson.com/health-care-reform.
Are there opportunities for employers to mitigate future cost increases?
State-run insurance exchanges launch in 2014, which may entice employers in the long term to offer a stipend in lieu of company sponsored plans as a cost-control strategy. Insurance companies begin selling coverage across state boundaries beginning in 2016, which is expected to increase competition and lower premiums. Finally, the bill increases incentives for wellness programs, and recent studies have shown that participation in wellness programs reduces health care costs. Remember, the legality of the bill has been challenged and there will be two critical elections between now and 2018, so savvy employers will evaluate their options and be ready to act under a variety of scenarios.
Caty Furco is a senior consultant and actuary for the health and group benefits practice at Towers Watson and can be reached at (415) 733-4309 or [email protected].
