More Work for the Self-Insured

Companies that insure their own employees struggle to keep up as health reform rules take shape.

Two years after the U.S. enacted healthcare reform, the government continues to issue new regulations piecemeal. Complying with the Patient Protection and Affordable Care Act has been especially arduous for self-insured companies that provide their own coverage to employees rather than paying a premium to an insurance provider.

Self-insured companies got more work last month when the Departments of Health and Human Services, Labor and Treasury issued a final rule on summaries of benefits and coverage that all companies must provide to new enrollees and special enrollees on the first day of the plan year beginning after Sept. 23.

The summaries were a hotly contested topic for self-insured companies, which argued that the new write-ups would duplicate information they are already required to provide under ERISA and could confuse employees. The government listened to such concerns, but rejected a proposal from business groups to exempt self-insured companies from the requirement to provide such summaries.

Though self-insured companies will have to scramble in the next six months to get the forms ready, “generally, the final rule is definitely a big improvement over the proposed rule,” says Debbie Harrison, senior manager of public policy at the National Business Group on Health.

Even after the final rule, companies continue to protest, claiming they don’t have enough time to comply with the mandates, which stipulate a four-page format for each plan, along with calculations of costs for complicated health conditions and procedures, such as maternity and diabetes care.

This week, the American Benefits Council wrote a letter to the federal departments requesting an additional year to comply and guidance ensuring that in the meantime, companies could provide the summaries the way they were already doing it.

Summaries of benefits and coverage are not the only to-do items keeping companies busy. In January, the Internal Revenue Service provided additional guidance on the new requirement that companies report the value of healthcare coverage on the W-2s issued to employees, beginning in January 2013. The guidance clarified some concerns about how to calculate the cost of healthcare for reporting purposes, and the IRS said it would continue to review comments as it considers future guidance. Until then, companies must work with what they have to figure costs for the benefits provided this year for next January’s W-2s.

Even as self-insured companies comply with the new regulations, they are looking ahead to the changes that will occur in 2014, when the state exchanges come online. At that point, depending on whether they are in a high-wage or low-wage industries, companies can begin to decide whether it’s worth it to continue to provide health coverage or better to let employees move to an exchange and pay the penalty of $2,000 per employee.

So far, 14 states and the District of Columbia have enacted a state insurance exchange by legislation or an executive order, while the rest are lagging behind to a greater or lesser degree, according to the Urban Institute, a nonpartisan economic and social policy research concern.

Many states are waiting to see how the Supreme Court rules on the individual mandate and how the 2012 election goes, even though states are supposed to show significant progress on their exchanges by January 2013. “There’s a certain amount of dice-rolling on the part of the legislators,” says Lee Doble, managing director of employee benefits services at Frank Crystal & Co.

Jay Fahrer, director of government relations at the Self-Insurance Institute of America, agrees. “Wait and see is the way to characterize healthcare reform right now,” he says. Aside from watching politics this year, “2014 is the year that everyone is waiting for,” says Fahrer, pictured at right.

Paul Dennett, senior vice president of healthcare reform at the American Benefits Council, says that the weightiest issues are to come. “Employers will need to ask: Should they change their role as a plan sponsor, continue to provide health coverage, narrow it?” Dennett says. “There are a number of broader strategic questions that employers will face in the future, but that are not before them right now.”




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