The potential impact of health-care reform on employers is beginning to take shape, CUNA Mutual Group’s Brad Pricer told America’s Credit Union Conference attendees during a Discovery breakout session. Credit unions need to educate themselves on the emerging landscape and determine what their future employee benefits philosophy will be, said Pricer, senior manager of employee benefits product management.
Health-care insurance exchanges and “play or pay” penalties will likely have the most influence on whether or not credit unions offer health-care benefits to employees and, if so, to what degree, said Pricer.
By Jan. 1, 2014, each state must establish an “American Health Benefit Exchange.” These will provide a platform for businesses and individuals to purchase qualified health plans (QHP) and provide for a Small Business Health Options Program (SHOP Exchange) to help small employers enroll their employees in QHPs in the small group market.
“With the assistance of the Department of Health and Human Services, each state will develop its own exchange within certain parameters mandated by the federal government. How those are built within each state will determine what realistic insurance options are available to employers through the private market or through the exchange,” Pricer said.
Also starting in 2014, the Exchange-Related Employer Penalty Tax—the “play or pay” tax—will be implemented. Certain large employers might be subject to penalty taxes if they don’t offer a health plan to employees, or if the plan doesn’t offer a certain level of coverage. Specifically, penalty taxes could apply for:
- Failing to offer health-care coverage for all full-time employees;
- Offering minimum essential coverage that’s unaffordable; or
- Offering minimum essential coverage under which the plan’s share of the total allowed cost of benefits is less than 60%.
“Credit unions will need to make a decision. Is it better to offer a health insurance plan to employees at a certain price, or not offer coverage and pay the federal ‘play or pay’ penalty taxes on an ongoing basis?”
Each credit union’s answer will be driven by affordability and whether the credit union embraces the philosophy of being an “employer of choice” to recruit and retain the best available talent. “We don’t have all the financial information yet, but understanding your options will help you make intelligent decisions when more is known.”
Citing a McKinsey & Company study, Pricer said it’s estimated 7% to 30% of businesses might opt to drop health-care coverage for their employees.
Pricer also provided attendees with an update on ongoing judicial challenges to the Health Care Reform Law. Twenty-six states have challenged the law’s constitutionality, with the most notable case being “Bondi v. HHS” in Florida. The judge in this case declared that the constitutionality of the individual health insurance mandate is so intertwined with all other aspects of health-care reform that the entire law is unconstitutional. The case appears headed to the U.S. Supreme Court, he said.
In the meantime, Pricer reminded credit unions about key provisions of the law slated to go into effect in 2011:
- Availability of consumer rebates for excessive medical loss ratios;
- Employers’ option to report health coverage costs on form W-2;
- Requirement that employees need a prescription to be reimbursed for over-the-counter medications/supplies run through their health flexible spending accounts, health reimbursement accounts, health savings accounts and Archer medical savings accounts;
- Updated employee notice requirements; and
- Establishment of grants for qualifying wellness programs.
Visit CUNA Mutual Group's website for timelines, legislative briefs, model notices, and forms.