Credit unions that waited to see how the Supreme Court would rule on the constitutionality of the Patient Protection and Affordable Care Act should examine the steps they’ve taken to comply so far—and determine what remains to be done.
That’s the message Brad Pricer, CUNA Mutual Group human resources process leader, imparts in a video discussing today’s Supreme Court ruling (see below).
“Starting in 2010 and 2011, and this year as well, there are requirements that have either gone into effect or will be going into effect,” Pricer says, citing a timeline on CUNA Mutual’s website that outlines the law’s requirements. “Now is the time [for credit unions] to work with their brokers or consultants to take stock of what they’ve done and what they need to do going forward.”
By Jan. 1, 2014, each state must establish an “American Health Benefit Exchange.” These exchanges will provide a platform for businesses and individuals to purchase qualified health plans (QHP) and provide for a Small Business Health Options Program to help small employers enroll their employees in QHPs in the small group market.
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 insurance options are available to employers through the private market or through the exchange.
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%.
Law offers opportunities
Support it or not, the health-care law should help credit unions better manage their health-care expenses, Pricer says. That’s because the health-care exchanges will allow credit unions to change how they've traditionally funded employee health-care programs.
“In the past, it has been a defined-benefit approach, where [the credit union] sponsors one or two plans and the cost increases are tied to how the plan performs over time,” Pricer explains. “Now, the exchanges allow a shift to a defined-contribution approach, much like what’s happening in the retirement space.
With a defined-contribution approach, employers can designate a certain amount of money per employee for health-care benefits and allow staff to purchase the coverage best suited to them, he says. People who want more coverage can pay more for it.
“This allows credit unions to better anticipate what their health-care offerings are going to cost them,” Pricer says. “They don’t necessarily have to tie [their health-care benefits] to a specific plan. Year over year, it allows them to budget more effectively."