Health care: What employers should do now
On June 28, 2012, by a narrow 5-4 decision, the Supreme Court of the United States upheld the constitutionality of the Patient Protection and Affordable Care Act (PPACA) on the grounds that the individual mandate penalty is a tax. Because the Constitution clearly gives Congress the ability to impose a tax, the Court ruled, all of the other questions surrounding the mandate are moot.
In writing for the majority in National Federation of Independent Business vs. Sebelius, Chief Justice John Roberts stated that, “The Affordable Care Act's requirement that certain individuals pay a financial penalty for not obtaining health insurance may reasonably be characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness.”
Moving forward: What to do now
The ruling is clearly not the end of the debate over health care reform, but rather only the first act. U.S. health costs are projected to be significantly higher than the rest of the developed world, while health outcomes in the U.S. trail other industrialized nations -- often badly. Providing expanded coverage, increasing the health status of our citizens, and better controlling costs are all goals that, while addressed in the PPACA, have a long way to go.
The ruling sends a clear message -- organizations need to review their plans and seize this opportunity to create better strategies around their health plans, both in design and employee communication.
For human resource professionals, the message here is very clear -- move forward with implementing and complying with PPACA, since major portions of it take effect in 2014 (a mere 18 months away) and other provisions take effect later this year and in 2013. For example, many employers soon will be required to report the value of employer coverage on IRS Form W-2, and all employers must issue a summary of benefits and coverages. Employers who were waiting to begin planning on how to comply (or whether to even offer or continue to offer health coverage) need to begin performing quantitative and qualitative analyses on their plans. More importantly, they need to begin looking at their health plans as part of an overall HR strategy for their organizations.
Key steps employers need to take now to plan for 2014:
1. Determine the strategic implications of whether or not to offer a plan. Health benefits are just one part of an overall total rewards strategy. How does an organization’s having (or not having) health benefits impact other talent acquisition and talent management strategies?
2. Review the Supreme Court decision as to its impact on your organization.
3. If a plan is offered, perform a qualitative analysis on whether it makes sense to remain a grandfathered plan or become nongrandfathered by examining the seven PPACA provisions that apply only to nongrandfathered plans.
4. Perform a qualitative analysis to determine if existing plans meet qualifying eligibility and affordability standards. In order for employers to avoid potential penalties, ensure that any health plans offered meet both standards.
5. Determine the true organizational costs of either offering or not offering health coverage after 2013. For many organizations, this is not the “no-brainer” that it may first appear.
6. Perform a quantitative analysis to project the so-called “Cadillac tax” set to begin in 2018.
Gary B. Kushner, SPHR, CBP, is president and CEO of Kushner & Company. He is a frequent presenter at SHRM conferences, a former SHRM board member and a former chair of the HR Certification Institute who has testified in front of the U.S. Congress on benefits and health care issues.
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