Crystal Ball: Predicting 2015 Health Care Reform

By Charles P. Stevens | August 12, 2013

Following certain plan design changes required by the law, major pieces of the 2010 Affordable Care Act were to go into effect starting in 2014. These included the insurance exchanges and the so-called individual mandate and employer mandate. However, on July 2, the Treasury Department announced that it would not enforce the employer mandate until 2015. Thus, employers of 50 or more full-time and full-time equivalent employees now have a one-year reprieve from pay-or-play. This announcement soon led to calls to delay the individual mandate. At the same time, we will soon learn how the insurance exchanges will look in terms of insurance products and prices, as the exchanges are anticipated to open their doors in October.

The Treasury Department stated that the employer mandate was delayed to address employer concerns that the reporting requirements are too complex. The delay is welcome and it is expected that clearer guidance will be forthcoming. However, even if rules are clarified, the requirement that large employers must offer coverage to full-time employees in 2015 may still affect employer decision making in 2013 and 2014. Labor statistics, survey responses and news reports indicate employers are hiring a higher percentage of part-time employees than before and that pay-or-play has had a role in this trend. The question is whether the one-year delay and the anticipated reduction in complexity will motivate employers to now hire more full-time employees.Beyond dealing with the law’s complexity, employers are also faced with other long-term planning concerns, such as the cost of coverage that is offered to eligible employees, and how their competitors may modify their own workforces and plan designs. Employee benefits continue to be a strong component in attracting and maintaining the best employees. Moreover, how do employers who contemplate using more part-time employees and perhaps more leased employees ensure that the work will be done as effectively as with full-time employees? This is a challenging balancing act.

Similarly, uncertainty exists concerning the manner in which insurance carriers will engage in their own decision making. Insurance carriers who were interested in selling products on the state and federal insurance exchanges have already submitted bids for the various plan designs that will be available on the exchanges in 2014. However, if the individual mandate is delayed as the employer mandate was, it is anticipated that fewer uninsured but healthy individuals will be motivated to obtain coverage from the exchanges next year. Such a change in assumptions could cause carriers to want to modify the pricing of their exchange products. Although considerable resources have been expended in creating the exchanges, a delay in the individual mandate could significantly affect their rollout later this year.

Our advice for employers is first, continue to monitor news reports and other alerts to keep abreast of those elements of the law that affect your decision making. Second, because most employers are not insurance experts, communicate early and often with your consultants. Understand that while brokers may know about pricing and available plan designs, an employee benefits attorney will be better suited to advise about strategies for compliance, taking pricing and design into account. Third, be nimble; engage in long-term planning to the extent required but think in terms of alternative possibilities and ranges. Understand that difficulty in making budget projections will be the “new normal” for some time to come. Through all of this, the goal is to attract and maintain the best employees by offering coverage they value. Thankfully, for many employers, the delay in the employer mandate will temporarily relieve some of this pressure and allow more time for strategic planning.


Author: Charles P. Stevens,
Attorney, Michael Best & Friedrich LLP