Health Reform Confusion Keeps Consultants Busy

Adding to businesses’ concerns is the uncertainty about whether the November elections could result in Republicans getting the power to undo the law or parts of it. “Many of our clients were hoping the Affordable Care Act would just go away,” Mr. Stover said. But since it has not, most companies are grappling with compliance issues.That wave has also hit Mercer, a global benefits consulting firm based in Manhattan. “Overall we are certainly seeing an increase in client activities,” all related to the court’s upholding the ACA, said Sharon Cunninghis, a senior partner at Mercer who leads the company’s U.S. employee health and benefits operation.Employee goodwill is on the line. In a 2011 Mercer survey of U.S. workers who contribute actively to 401(k) plans, 91% of respondents said getting health benefits through work is just as important to them as their salary.Some changes required by the law have already happened. For Buck Consultants, that has meant scores of panicked phone calls from businesses that need help preparing mandatory “summary of benefits and coverage” documents. These eight-page handouts need to be ready during the coming open enrollment period for health benefits, generally held in October and November. The summaries are meant to help workers choose among company offerings. “The penalties are huge, and requirements are very specific,” Mr. Stover said.

New rules on “medical loss ratios,” which essentially require insurers to spend from 80% to 85% of health premiums on providing care or improving its quality, have also caused headaches, according to Mr. Stover.

On Aug. 1, the plans were required to start issuing partial premium refunds in cases where they spent too little on care. “A lot of our clients are getting rebates, and they have to figure out what to do to share them with employees,” he said.

But far more complex issues are on the horizon. The one that most concerns employers is the so-called Cadillac tax, in which companies that offer employees generous benefits will be taxed. “That’s somewhat surprising, since it doesn’t take effect until 2018,” Mr. Stover said. The threshold for the tax is a plan costing $10,200 for an individual and $27,500 for a family.

Among workers Mercer surveyed, 36% said they expected to see changes in what their firms will offer due to the ACA. But employers who participated in a Buck Consultants webinar last month indicated that the changes might not be dramatic or sweeping.

Of 370 respondents who took part in a poll after the event, only 1.9% said they would drop coverage when the ACA becomes fully effective in 2014. That would force many workers to find their own insurance on state health insurance exchanges. (The exchanges are marketplaces that will be set up as part of the ACA.) Nearly 69% of respondents said they would continue to offer employees coverage, and about 30% said they had yet to decide.

Only 3.2% of firms said they were holding off on changes until the elections are over, though 17.5% said they would make only short-term changes needed until then. About 50% said they were working on the assumption the law would stand, and about 29% had not yet decided what to do.

Mercer has developed a checklist to help clients prepare for the 2013 open enrollment period this fall. Businesses might want to extend their signup windows beyond the traditional period to allow more time for employees to become informed about new choices, the consultancy said.

A version of this article appeared in the Aug. 13, 2012, print issue of Crain’s New York Business.