As companies gear up for the full impact of the Affordable Care Act, many are prepping big alterations to how they address their work force and retiree base, ranging from how they classify part-time and full-time workers to how they will provide retiree health-care benefits, industry consultants say.
The main provisions of the act, which will require employers to offer health-care benefits to employees who work at least 30 hours a week, are scheduled to go into effect in 2014 and now appear locked in after the re-election of President Obama. About 15% of employers said they would wait until the outcome of the election to move forward with planning, according to a poll by benefits administrator Mercer following the Supreme Court decision that upheld the law in June. The election “was the last stop,” and employers are now in full planning mode, said Tracy Watts, national health care reform leader at Mercer.
Some companies will face bigger decisions than others, depending on the structure of their work force. ”For companies that have mostly salaried employees, 2014 is kind of a non-event for them,” Watts said. But companies that are not currently offering benefits to part-time employees will have to assess whether their workers are eligible for coverage and what actions they must take to comply with the law, Watts said. The retail, hospitality and health-care sectors, where part-time work is common, are expected to be the most impacted.
Companies are also looking at what opportunities the new law offers them to deal with the post-retirement benefits they provide to workers under 65, said Ron Fontanetta, a senior consultant in the health and group benefits practice at consultant Towers Watson . About 25% of large employers offered retiree health benefits this year, and 88% of those also offered health benefits to retirees under 65, according to a survey by the Kaiser Family Foundation.
In the manufacturing and auto industries, for example, it is common to provide benefits to retirees years before they become eligible for Medicare. Companies in those sectors might consider offering lump sum payments to retirees that can be used to purchase coverage on a privately or publicly-run exchange.
“Post-2014 the opportunities in the public exchanges for pre-65 retirees, coupled with the fact that Medicare is already a robust offering, will cause employers to rethink their commitment to retirees,” Fontanetta said.
Some employers are also considering creating private exchanges for retirees, active employees or both, Mercer said on Monday.
Source: The Wall Street Journal/CFO Journal