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POST ELECTION: It's Time To Get Serious About Health Care Reform

Over the last couple of years we have witnessed an interesting dynamic when it comes to planning for compliance with the Affordable Care Act in the run-up to the 2010 Mid-Term Congressional Elections, employers were reluctant to dive into compliance issues, believing somehow that the election might result in repeal. It didn't. Then, in the summer of 2012 the frequent refrain was: let's wait to see what the Supreme Court decides. Now, since late summer the refrain has been: let's see what the world looks like on November 7. In other words, almost from the date of its passage in 2010, employers have been watching Washington, D.C. and delaying real action because it appeared that some or all of the Act would disappear.

Well, here we are on November 7. President Obama has won re-election and we all know definitively that the Act will not disappear. In fact, as far as D.C. is concerned, it is now full steam ahead with implementation. This means it is (finally) time for employers to get serious about the Act, to understand its compliance requirements, its administrative implications and its costs. We'll write more at this space in the coming months about all of these, but for now a few very general observations on compliance and cost.

Compliance.

The federal regulators have been relatively quiet in the months leading up to the election; very little (if any) regulation directly impacting employers under the Act has been released since some time in the summer. Now, many of the regulations that have been held back prior to the election will begin to be released after November 6. Some things to watch for:

  • The scope of "preventive services" as defined by ACA will continue to expand beyond the historical experience of most professionals who administer employee benefit plans. Under ACA, non-grandfathered plans (really, are there any grandfathered plans left out there) are required to pay first dollar for preventive services. Under ACA, preventive services include those services rated as A or B by the U.S. Preventive Task Force. When the rules were first announced, those services included things like mammograms and colonoscopies; that is, services most employee benefits professionals expected were "preventive." However, Health and Human Services ("HHS") has shown a willingness to expand this list, as has the U.S. Preventive Services Task Force. The Task Force quietly announced this past summer that it was recommending that preventive services include screening for obesity for all adults. Those found to be obese should be offered at least 12 weeks of "intensive lifestyle counseling." That's right. Under the rubric of "preventive services," your group health plan will soon be required to pay first dollar for 12 weeks of Jenny Craig or Weight Watchers. This is just the beginning, of course, not the end of the expansion of what is "preventive services."
  • The Internal Revenue Service will soon release long-awaited regulations on the non-discrimination rules applicable to non-grandfathered insured plans. The non-discrimination rules will be essential in 2014, as they will be one hedge the government will have to curb employers from deciding to provide benefits for their management team and executives and pay the penalty with respect to rank and file employees. I personally will be surprised that these regulations will be viewed as "favorable" by employers.

These are just some of the new rules on the horizon. There are many, many more. And, of course, employers should already be complying with elements of the Act that are already in place and operational, like the Summary of Benefits and Coverage.

In a word, compliance under the Act will become more, not less, cumbersome. Employers should take stock now of the people they have in place to deal with compliance issues and the advisors they rely on to give them sound advice.

As to cost, again, we will talk more about this in the future. Suffice to say that there is nothing affordable about the Affordable Care Act for employers. Premiums will increase as insurers are required to take on additional risk. Taxes, not much talked about by the supporters of the Act, are set to be collected under the Act as early as July 2013, when collection of the Comparative Effectiveness Fee begins. Costs will only be exacerbated by the imposition of an unknown tax in 2014 on all members of all group health plans as part of a program to offset the costs of providing individual insurance to all regardless of pre-existing conditions or evidence of insurability. And, of course, the 2018 Cadillac Tax looms on the horizon. We'll talk about all of these in the future.

For now, it should suffice as fair warning that employers need to redouble their efforts to contain costs in their group health plans - controlling costs they can control because the taxes and other costs are somewhat beyond their control. Again, identifying members of your team who can "own" cost-reduction efforts and working with outside advisors who can provide informed advice will be key. There are no more reasons to delay. It's time to get serious about the ACA.

Visit our Health Care Reform Center for all the latest news out of Washington.


Peter Marathas is a partner at Proskauer, an international law firm providing general services, including employee benefits and employment advice, to clients of all sizes, across the country. Mr. Marathas advises clients on all matters related to the Affordable Care Act and other benefits matters from his office in Boston. This blog is not, is not intended to be, and shall not be construed to be, either the provision of legal advice or an offer to provide legal services, nor does it necessarily reflect the opinions of the firm, our lawyers or our clients. No client-lawyer relationship between you and the firm is or may be created by your access to or use of this material.Rather, the content is intended as a general overview of the subject matter covered. Proskauer Rose LLP is not obligated to provide updates on the information presented herein.

Posted November 07, 2012

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