Strategic Cost-Saving Opportunities Digital 2014 | страница 4

Delays = opportunity

click here
for a PPACA compliance timeline.

What employers need to know about the impact of PPACA
The Patient Protection and Afford-

fraught with change, so the future

complacent as you plot a course

able Care Act (PPACA) represents

is murky. Still, there are already

of action.

the most fundamental alteration of

some valuable insights you can

the country’s health care system

glean as you prepare your com-

more time to strategize, but a

since the passage of Medicare

pany for the new world of health

year really isn’t that long, espe-

and Medicaid in 1965.

care insurance, administration

cially since 2014 is considered

and delivery.

the ‘look back period’ for 2015,”

For a video overview of health
care reform, click here 1 . For a

says Ron Present, a principal

more detailed video look at health
care reform, click here 2 .

the firm’s Health Care Industry

As it continues to be implemented in phases over the coming
years, PPACA will alter how businesses evaluate the provision of
health care benefits, how employees and employers shop for

“The delay gives employers

with Brown Smith Wallace and
Group leader. “You don’t want to
be scrambling for advice or help

insurance, how benefit plans are

Insurance mandates

at year-end 2014 like companies

administered and who picks up

If you employ at least 50 full-time

were doing when the Sarbanes-

the tab for medical services.

equivalent (FTE) employees, your

Oxley mandate went into effect.”

The impact of PPACA is wide

company originally had a deadline

ranging, and the rollout to date is

of Jan. 1, 2014, to provide govern-

mandate is an individual mandate

ment-defined afford-

that requires each person to have

able and appropriate

insurance, as well. This mandate

health care cover-

was also scheduled to take effect

age to all of those

at the beginning of 2014 but has

employees or face

since been pushed back. Due to

steep fines. For a

the recent problems users have

number of reasons,

had attempting to purchase insur-

the implementation

ance through the government-

of that mandate has

run insurance exchanges on the

been pushed back

www.healthcare.gov website,

to Jan. 1, 2015.

however, Present thinks there is

While that gives

concern over any further pushback

you more breathing

of the individual mandate.

1

2

Paired with the employer

room — particularly
if you are at or near

Present says. The concern is cen-

old that subjects you

tered on adverse selection and the

to fines — it doesn’t

ability to spread risk over the entire

mean you should be

Strategic Cost-Saving Opportunities • Digital 2014

strongly opposing any delay,”

the 50-FTE thresh-

4

“The insurance industry is

insured population base.

Community ratings

Private exchanges

employees from multiple compa-

Another major issue facing indi-

As an alternative to government-

nies together and funnel them to

viduals and employers, especially

run exchanges, private entities are

a health insurance provider as a

those that employ fewer than 50

offering their own insurance ex-

single group.

FTEs, is the introduction of com-

changes. These operate in much

“Under the PEO setup, em-

munity ratings as the basis for

the same way as government-run

ployees still report to you as their

determining health insurance pre-

exchanges, but with certain criteria

employer, but from a benefits

miums. Community ratings are an

that can help focus and refine the

standpoint, they’re part of a differ-

attempt to spread health care cost

pool of businesses and related in-

ent entity, grouped together with

risk by basing rates on the overall

dividuals using the exchange. This

people from other employers, and

health of a given population within

higher degree of control, at least

they’re offered coverage based

a geographical area. The unintend-

in theory, allows for better cost

on the sum total of that group,”

ed consequence is that people

management. As a result, there is

Present says. “So, for insurance

who are healthier — generally the

a growing trend toward use of the

purposes, your employees are

younger portions of the popula-

private exchanges by employers,

effectively employed by a much

tion — may drop their insurance

Present says.

larger organization, with one of the

“They’re designed for compa-

goals being to reduce health care

premiums, leaving a smaller pool

nies to allow their employees to

costs to the employer. They have

of remaining customers paying

go to one broker and place all of

effectively allowed their employees

into the company-sponsored plan.

their insurance needs within that

to go from a community rating

That, in turn, decreases revenue

single private exchange,” he says.

environment to a health risk under-

for insurance providers, causing

“In some cases, it essentially takes

writing environment.”

them to cut services by narrowing

the HR and benefits component

the selection of available plans or

out from under the company’s

rounding PPACA is still extremely

raise premiums again.

umbrella and places it within

fluid, and will be for quite some

the exchange.”

time, the most important thing for

coverage altogether due to high

“That problem is compounded
because the ratio of the lowest

Large employers have the clout

Although the situation sur-

employers to remember as 2014

to highest premiums can only be

to work directly with private ex-

begins is to examine ways to

3-to-1,” Present says. “So, if you

changes and still effectively better

increase control over their costs

have a population with a wide

control their insurance rates. Due

by taking a strategic view. If you

range of age and health needs,

to the sheer