PPACA Sparks Big Changes for This Year's Enrollment Season
As the 2013 enrollment time draws near, employers are preparing to jump through a few extra hoops thanks to the recently reaffirmed health care reform law.
In addition to the usual notices and benefit communications that employers must prepare and distribute to their employees, the Patient Protection and Affordable Care Act has added a summary of benefits and coverage (SBC) to the enrollment pile for plans that begin on or after Sept. 23, 2012.
The SBC is a four-page document that provides information about a plan's health care coverage and out-of-pocket costs for employees, according to a recent online post by law firm Warner Norcross & Judd LLP. Employers with fully insured plans can expect their insurers to provide the bulk of the content for their SBCs. Self-insured companies, on the other hand, will have to craft the SBCs themselves, the law firm notes.
The rules allow for a few actions that can simplify the process for employers, Warner's post notes. For example:
- Separate tiers of coverage can be covered in a single SBC.
- The SBC can be a stand-alone document or it can be included in an enrollment booklet, provided that it isn't buried and hard to find.
- A single SBC can be used for multiple plans, assuming that the only differences are deductibles and copay/coinsurance amounts, and that the document clearly defines these differences between the plans.
- The same distribution rules apply to SBCs as to summary plan descriptions (SPDs) under ERISA.
Employers with calendar-year health flexible spending accounts also will want to inform workers about the new $2,500 annual contribution cap created by PPACA, according to Linda Rowings, compliance director for United Benefit Advisors. Prior to enrollment, companies should double-check to ensure that their FSA administrator is prepared for this change, Rowings added.
Unfortunately for employers, these changes represent only the tip of the iceberg for new PPACA notices and enrollment duties. Once the health care exchanges, "pay or play" penalties and other major provisions of the law come into effect in 2014, employers can expect even more work around enrollment time.
One thing PPACA likely won't change, though: Quality employer-sponsored health benefits, which can strengthen recruiting/retention efforts and improve a workforce's health and productivity, remain highly valued by employees.
That's the result of a new survey that shows employees' satisfaction with their employer-provided benefits either rose or remained stable in 2012 compared with 2009, despite increased cost-sharing. The poll by the National Business Group on Health found that nearly two-thirds of workers are very satisfied with their health coverage through their employer or union, according to a PLANSPONSOR report.
While the increasing compliance hassles and climbing costs may prompt some employers to dump health coverage in the future and send their employees into the health care exchanges, a separate study suggests that move won't save employers money in the short or long term.
The study by Truven Health Analytics, as reported by the Employee Benefits Counsel, found that employers that choose to drop coverage in 2014 and pay penalties under PPACA likely will feel pressure to "make employees whole" by increasing compensation (which lacks the tax shelters of providing health benefits). This, combined with the penalties, will make dropping coverage a losing proposition financially, researchers said.
In light of those facts, most employers likely will be better off suffering through the extra enrollment and compliance work and continuing to provide health benefits, the report suggests.
"Employers must provide market value -- in benefits and compensation -- to retain skilled workers and will not be able to unilaterally cut benefits and expect employees to absorb the projected inefficiency of exchange-based coverage," the Counsel study notes.