Today’s the day – September 23, 2010 – the first impacts of the Patient Protection and Affordable Care Act (PPACA) begin to take effect. As of today group health plans may not have lifetime maximums, must cover children up to age 26, cannot deny coverage to children with pre-existing conditions and cannot cancel coverage due to technical mistakes on an insurance application. These are changes that most people feel are positive. The downside is that these changes are estimated to increase premiums for small businesses an average of 3% in 2011 (Mercer Survey on Healthcare Reform – Getting Ready for 2011).
More changes are coming in the next few years and those changes will likely bring more increases in premiums. Small businesses – particularly in this difficult economy – often cannot absorb these increases so they are forced to take one of several paths. They can reduce the benefits provided (increasing deductibles, co-pays, etc.), they can increase the premiums they charge employees, or they can do both. None of these options really reduces the cost of health care – they simply shift the costs. (These changes may also result in losing “grandfathered” status, but personally I think that whole conversation was much ado about nothing. No small business with a fully-insured plan was going to meet the grandfathering regulations anyway.)
So what can small businesses do to control their healthcare expense? At a recent forum OMNI Employment Management Services sponsored for our clients there were several suggestions.
Manage your workforce. There continues to be support to not require companies to provide healthcare to part time workers. The “standard” for defining part time seems to be closing in on those who work less than 30 hours per week. So, having a larger percentage of your employees working less than 30 hours per week will reduce the effects of healthcare reform on your business.
Be aware that while many changes in the PPACA might be seen as “bad” from a business owner’s perspective, those same changes may be “good” from your employee’s perspectives. Who can argue, from a humanitarian perspective, that the changes effective today aren’t “good” – providing more and better coverage to more people? On the flip side, these changes increase costs and increase the government’s involvement in healthcare. Our recommendation is to be careful how you discuss healthcare reform with your employees. Be sensitive that while these changes may be increasing costs, they may be improving people’s lives. That doesn’t mean that you both aren’t right – you just want to take care in how you discuss the impacts.
Look closely at high-deductible plans associated with Healthcare Spending Accounts (HSAs) and Health Reimbursement Accounts (HRAs). Both offer the employee and company some interesting options that could have a substantial impact on your monthly premiums as well as your risk management. Both also require much more communication to implement them effectively.
Be patient. There is a strong likelihood that the regulations that ultimately are implemented as part of “healthcare reform” will be substantially different than those that were passed in the PPACA. Many lawmakers are working to repeal all or parts of the Act while others are trying to strengthen what has already been approved. By the time the final regulations are written and implemented over the next three years I can almost guarantee things will be different than they look today.
The real tip for business owners – get educated. Talk to your broker, your carrier or an HR consultant. Times are changing and you need to know what your options are so you can be prepared. 2014 isn’t that far away.
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