When someone mentions healthcare reform what exactly are they referring to? This term has become synonymous with The Affordable Care Act that was signed into law March 2010 by President Obama. The law, which rolls out over the next few years with most changes occurring in 2014, is a common topic in America’s boardrooms as companies develop their strategic plans for future growth. The decisions made in these boardrooms over the next few years will provide the backdrop for the future of healthcare coverage in the workplace.
The law was designed with the intention that medical coverage will not only become affordable for every American, but by 2014 each American will be required to have coverage. In addition, employers will be faced with the “Pay or Play” decision in 2014, which simply means that employees will either be provided healthcare by their employer (the Play option) or coverage will have to be purchased through an Exchange on an after tax basis (the Pay option). If employers choose to “Pay” rather than “Play”, employees will be forced to purchase healthcare coverage somewhere else.
The most recent changes that took place in 2011 include coverage for children up to the age of 26, removal of lifetime maximums from existing and new medical plans and no cost sharing for preventive healthcare. In addition, the exclusion of over the counter drugs paid by Flexible Spending accounts was enacted.
Going forward in 2012 employers will be required to report the value of employee health coverage on individual W2’s. The plan value will not be included as taxable income for employees. This W2 reporting is a tracking mechanism and was designed to support the 40% excise tax employers with high cost plans will be subject to in 2018. Employers will want to take a proactive approach and discuss these W2 requirements with their payroll providers to ensure they are planning for these upcoming changes.
As 2014 draws closer, the debate in Congress continues over healthcare reform. The issue is bipartisan and some organizations are jumping on the bandwagon by filing lawsuits claiming the law is unconstitutional. Whatever the outcome, the next few years are going to be very interesting as organizations decide whether or not to use a health plan as a competitive advantage in attracting top talent.