Companies putting together 2011 health benefits--and many have already begun the process--are in the uncomfortable position of having to make big-dollar decisions before some of the blurry language in the healthcare reform bill is clarified. The first complicated requirements set by the Patient Protection and Affordable Care Act go into effect for plan years starting after Sept. 23. "People are not appreciating how much of this law we won't know for a long time," says Susan Relland of the law firm Miller & Chevalier, who's a board member at the American Benefits Council.
Probably the most significant provision says employees' children under 26 who are not enrolled in another group plan must be allowed to enroll in company plans in the next plan year, which for most companies probably starts Jan. 1, 2011. Beginning in 2014, plans must cover children up to age 26 whether or not they have access to another plan. Companies are considering whether to face the administrative hassle of determining whether adult children have access to other plans or just let all employees' children up to age 26 participate starting with the next plan year, explains Relland.
"Inclusion of adult children up to age 26 has been the No. 1 question raised by our clients," says Randall Abbott, senior consultant at Towers Watson. However, he doubts companies will decide to cover all adult children. One scenario, Abbott says, is that a company could set up a separate rate category for adult children and levy a different charge.
Further complicating the issue, says Gretchen Young, senior vice president for health policy at the ERISA Industry Committee (ERIC), is uncertainty about whether the new law requires adult offspring to be dependents for tax purposes to qualify for the health coverage.
Another major provision outlaws lifetime and annual limits for essential benefits in plan years starting after Sept. 23. The Department of Health and Human Services will define which benefits are essential. Non-essential benefits might include chiropractic, occupational therapy or fertility services. "If employers have to eliminate annual limits for those ancillary benefits, they may choose to simply eliminate the coverage completely," explains Relland.
"This is a huge issue in terms of cost control," says Young. ERIC's biggest concern is how HHS defines the term "grandfathered," she says, since grandfathered plans will not have to comply with the law's requirements that plans immediately eliminate co-pays for preventive care, ditch separate plans for higher-paid executives and other provisions.