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Industry Insights

To provide a health plan or not provide a health plan? That is the employer's question


2014 brings new opportunities and challenges for the insured, the uninsured, employees, employers, and employer sponsored health plans.

Whether employers continue to provide a health plan in 2014 and beyond may depend on what the employer plan looks like, cost of the plan, what competitors' are practicing, and finally, what the political landscape looks like. Many employers feel it's a competitive advantage to provide a plan to their employees in order to attract and retain key talent. But how can an employer comply with the Affordable Care Act (ACA), engage their employees, and keep their wallets intact? Here are four steps employers should consider to determine the fate of their benefit programs:

1. Stay informed.

A few ACA mandates have been delayed and/or will be modified by agencies once they issue final guidance, and an employer's ability to stay up to date is key to remaining competitive.

The "large employer" (50 or more full-time employees) mandate, also known as the "Play or Pay" mandate has been postponed until 2015. This gives large employers more time to understand the requirement to provide full-time employees and their dependents health insurance and avoid paying a penalty to the government if an employee receives a subsidy when they purchase coverage from a state exchange. We need more guidance to see whether transition relief will be granted to non-calendar year plans (plans renewing on a date other than January 1st) that would delay this effective date to the first plan year beginning after January 1, 2015.

The effective date of the automatic enrollment mandate imposed on employers with more than 200 employees) is yet to be determined, as well as the effective date of the nondiscrimination rules applicable to fully insured plans that lost their grandfathered plan status. Those rules would require those insured plans to comply with rules similar to the Internal Revenue Code § 105(h)(2) nondiscrimination rules.

Michael Mascolo
Michael Mascolo - ()

2. Understand your immediate compliance deadlines

There are a number of other ACA changes that take place in 2014 that are NOT affected by the delay of the Play or Pay mandate, and employers must modify their health plans now to be in compliance. Those changes include a maximum 90-day eligibility waiting period; prohibition on all pre-existing condition limitations; prohibition on dollar caps on essential health benefits; expansion of wellness incentives; dependent coverage up to age 26 (regardless of dependent's access to own coverage); various plan design requirements applicable to non-grandfathered health plans; expiration of waivers for certain limited medical plans and assessments and payments of various ACA-related fees.

3. Look for opportunities.

Employers should not let a few rules stop them from exploring creative solutions. Self-funding is a very attractive alternative. Small to mid-sized employers (50-250 employees) who may have thought that only the largest employers can self-fund are finding their tolerance for risk to be acceptable in this new and changing environment. Designing a self-funded plan can be made easier with the aid of certified self-funding specialists. It is also a way to offering minimum essential coverage to full time employees, thereby complying with one of the aspects of the ACA.

Employers are also finding that designing and funding these new health and welfare plans can help them meet rules for variable hour workforce, cap their expenditures and allow them to maintain focus on their business.

4. Look ahead.

Once the employer has addressed its immediate compliance needs under the ACA, the next challenge is to control health care costs as an increase in the number of insured lives (employees and dependents) and population continues to age and suffer from chronic health conditions. Employers will be required to understand their employee population's risks and find programs or processes to reduce health care spending as employers are faced with a new risk, the imposition of excise taxes if their health care costs are over the thresholds set by the federal government ("Cadillac Plan Tax").

In the past, designing the right health benefits package was a matter of choosing one insurer's plan over another's, a decision driven largely by cost and services. Today, the decision about what to do with health benefits is best made with the help of knowledgeable experts and thoughtful approach. No matter what lies ahead with respect to the fate of the ACA, employers should look for insurance partners who can help them identify financial risks and develop customized solutions for their group health plans, their employees and their business.

Michael Mascolo is the North Region Employee Benefits Practice Leader for Wells Fargo Insurance, based in Madison, New Jersey. He and his team of benefit professionals serve plan sponsors throughout several Northeast, Mid-Atlantic, and Midwest states. He can be reached at 973-437-2300 or michael.mascolo@wellsfargo.com.

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