Employer Mandate Delay No Free Pass

Healthcare providers with high headcounts get a break—they won't have to supply affordable health insurance to their employees or face a fine—yet. But hospitals and health systems still have to be prepared to deal with health insurance exchanges on Oct 1.

HR executives gearing up for what is anticipated to be the biggest open enrollment season yet are breathing a sigh of relief.

On July 2, the Obama administration delayed the Patient Protection and Affordable Care Act's large employer mandate until Jan. 1, 2015. The delay puts off for one year the requirement that employers with more than 50 employees provide affordable health insurance or face a fine. Depending on the size of the business, the penalties could tally in the millions.

Since nearly all hospitals and health systems already offer health insurance benefits, the challenge leading up to the October 2013 enrollment period, and the reason business groups cheered the mandate's delay, centered on the provisions in the PPACA requiring insurers and large employers to report each eligible employee's coverage.

With employees poised to qualify for health benefits when they passed the 30-hour-work-week mark, hospitals and health systems had been scrambling to figure out new plan designs to incorporate the many part-time and per diem staff newly qualified for benefits.

"The 30-hour rule was going to require us to offer benefits to people who wouldn't have benefits historically. We were having employees getting premium pay in lieu of benefits because 450 employees were falling into statuses that we were making them benefit-eligible," says Brian Guyton, director of health benefits for Allegheny Health Network's 8,300 employees. "Of course, best practices would be aligning that with the open enrollment period, but there were a lot of problems with the timing of those windows."

Healthcare providers with high headcounts were also preparing to more heavily manage their part-time workers, and were considering cutting down on part-time hours or the use of per-diems to reduce costs. Almost a quarter of employers had not determined their tracking and reporting systems to calculate work hours and coverage, while 33% had not determined a look-back period, when news of the delay was announced.

But employers "know it's no free pass," Julio A. Portalatin, President and CEO of the consulting firm Mercer, says of the delay. "We expect employers to stay 100% focused on cost management. Last year they slowed benefit cost growth to its lowest level in 15 years, but in 2014 they have the new fees and the likelihood of new enrollment to contend with, on top of normal medical inflation."

Before they get too comfortable with the one-year delay, employers have another cost-cutting, time-sensitive task. With the health insurance marketplace still scheduled to go live Oct. 1, employers are preparing for employee questions about exchanges.

Employees are obligated by federal law to verify that although they are eligible for an employer-based plan, they must show the plan's cost and coverage to be eligible for the premium tax credit and purchase health insurance in the marketplace.

This provision will leave many employees turning to their benefits departments for questions about their plan's cost and value. Another Mercer survey, this one from June, found that 50% of employers are concerned about handling questions about the exchanges.

While employers are not required to respond to employee inquiries, offering some assistance to employees is preferable to the alternative—employees facing financial penalties for submitting false information.