As speculation grows about the recently passed health care reform legislation, CUNA Mutual Employee Benefits Consultant Brad Pricer urges credit unions not to panic.
"A lot of different things about what was signed into law may still change, so it is important that credit unions don't overreact to this," said Pricer. "That being said, don't sit back and wait to try to take control of your health care costs."
On March 21, the U.S. House of Representatives passed what has been dubbed landmark health care reform legislation, the Patient Protection and Affordable Care Act. In addition to the main bill, the House and Senate also passed the Health Care and Education Reconciliation Act of 2010, which includes changes to the main bill sought by the House.
Pricer said while the merits of the law continue to be debated, research suggests that it will have a minimal impact on curbing rising health care costs, so it's never too early for credit unions to evaluate their current plans and determine the most appropriate plan for them. Pricer also advised credit unions not to count out consumer-directed health plans like health savings accounts just yet.
"It is hard to tell where HSAs are headed, but the last thing I want to do is discourage consumer-directed health plans, because there is not a lot immediately in legislation at this point to drive premiums down directly," said Pricer. "You don't want to sit and wait thinking 'Well, there is really not much I can do to control costs.' The largest health carriers have had the most profitable years ever, so there is a real need to take control of the rising cost of health care now. And it's possible that high-deductible health plans and HSAs could prove to be very beneficial."
Pricer has highlighted some of the reform legislation provisions that would affect employers:
o Employer mandates. Effective in 2014, most employers with 50 or more employees must offer coverage to employees. Employers who do not do so may be subject to hefty penalties. The benefit plans offered will also have to meet certain requirements.
o Individual mandates. Citizens and legal residents will be required to have a certain level of health coverage or pay a tax penalty. These rules could restrict the usage of high-deductible health plans and will decrease the chance that your employees will decline coverage under your plan.
o Coverage subsidies. Small employers that provide health insurance for employees will be eligible for a tax credit. Also, employers who provide insurance to retirees over age 55 who are not eligible for Medicare are eligible for a temporary reinsurance program.
o Health benefit exchanges. In 2014, state exchanges will be established for small businesses and individuals to shop for health insurance. Larger businesses will be able to purchase coverage in the exchanges in the future.
o Insurance reforms. These reforms require policies to provide dependent coverage for children through age 26. They prohibit lifetime coverage limits, rescission of coverage except in cases of fraud and imposing preexisting condition exclusions on children. Many of these provisions will take effect in 2010. They may affect your benefits and how you administer your benefit programs, said Pricer.
"There's a lot that credit unions don't need to be concerned with right now. For example, so far plans that exceed $10,200 annually will be considered Cadillac plans and could be open to taxation." Though it is years away, credit unions can look at their medical plans offered and start thinking about the long term impact going forward, said Pricer. Two other big changes are that over the counter drugs not prescribed by a physician are no longer reimbursed from flexible spending accounts. "Another change to HSAs that might scare some people is that the legislation as it stands now increases the tax on distributions made for nonqualified medical expenses from 10% to 20%. Both changes are slated to take place Jan. 1, 2011 but again the deadline for those provisions might change as well."