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By Gale Scott, Crain’s New York Business
The Affordable Care Act’s long-term impact on employers is still uncertain. But one sector is already getting a boost from the law, recently upheld by the U.S. Supreme Court: Business is booming for benefits consulting firms.
“We’re swamped,” said Rich Stover, a principal with Buck Consultants in Secaucus, N.J.
Whatever the new law will ultimately mean for the cost and quality of health care in the U.S., in the short term it has meant anxiety and paperwork for employers. Though some provisions will not take effect for years, others are already in place, with more to come in 2014.
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.