What Health Care Reform Means for You
CCA employees, along with millions of their fellow Americans, just lived through the most sweeping change to health care in America in more than 40 years.
In March, President Obama signed the Patient Protection and Affordable Care Act of 2010 (PPACA) into law. Most commonly known as “health care reform,” the legislation marks the greatest change to the U.S. health care system since the passage of Medicare and Medicaid in 1965.
The goal of the act is to medically insure more Americans, improve access to quality care, reduce medical costs and reduce the national deficit. But many CCA employees understandably are interested in finding out how it will affect the company and health care for themselves and their families.
Changes in Store for CCA
CCA’s Human Resources department knows that employees and their loved ones likely have many questions about health care reform and how the legislation will affect their benefits. Trish Barnard, CCA senior director, Employee Benefits, and her team have been closely following health care reform and analyzing its implications for CCA-sponsored health care and benefits.
“We are processing what exactly the legislation means for us as a company,” Barnard says. “There are many components to reform, some of which take effect sooner than others. In the shorter term, most of reform that impacts employer plans is at the plan design level, meaning what the plan covers. In the longer term, when insurance exchanges, subsidies and penalties are implemented, the financial impact for employers will be more significant. Many of the major provisions, such as insurance exchanges and subsidies, will not go into effect for several years.”
The CCA Benefits Department has already started receiving questions from staff about health care reform. According to Barnard, employees are most interested in knowing when dependent children up to age 26 can be added to their health plans.
“This provision will impact the plan beginning April 1, 2011,” she says. “So staff should watch their open enrollment materials in 2011 for more information.”
CCA’s Employee Benefits specialists are also working with the company’s benefits consulting partner as well as benefits plan administrators from Blue Cross Blue Shield of Tennessee and United Healthcare – CCA’s two current medical plan providers – to better understand the law and how it will shape medical coverage and employee costs.
“Based on what we know about the health care reform, most employees and their families probably won’t undergo or see much change in the first couple of years,” Barnard explains.
Before health care reform passed, some companies went public about the projected costs they expected to incur if the act became law. One major corporation even claimed that the reform would cost the company $100 million in its first year. While the full impact is unknown at this time, CCA does not expect an impact of this magnitude for its plan and participants.
“Employers who are the most impacted financially may be those who offer retiree medical coverage and, therefore, have larger exposure,” she says. “Employers who have a large percentage of their work force they don’t cover or who cannot afford the company’s coverage also have greater exposure. Over the years, CCA made important benefits decisions, such as shortening the waiting period for health insurance and adding 100 percent coverage for preventive care, which positions the plan ahead of some of the mandated changes.”
According to Barnard, with health care reform, employer plans will eventually be evaluated to ensure that they meet basic minimum standards. If they don't, employers will pay penalties.
”Reform will also be looking at the other end of the spectrum to see if a plan provides too much benefit, what's referred to as ‘Cadillac plans’ – if it does, employers will also pay penalties,” Barnard says. “So over time, employers will have to watch their plan design and cost to make sure they are somewhere in the middle to avoid paying significant penalties.”
Changes in Store for Insurance Companies and Health Plans
In addition to making medical coverage available to more Americans, health care reform imposes a series of new guidelines and mandates on health insurers, most of which occur from 2011-2018. According to the White House’s HealthReform.gov Web site, some of the most immediate changes include:
Permitting dependent children to stay on family policies longer. Adult children will be able to remain on their parents’ health plan up to age 26 in certain circumstances.
Not denying coverage of children based on a pre-existing condition. Under health care reform, it will be illegal for health insurance companies to deny coverage to a child based on a pre-existing condition.
Prohibiting lifetime limits on what insurers will pay for medical care. According to HealthReform.gov, this means that insurers can only apply restricted annual benefit limits and can no longer arbitrarily cancel coverage in the event of sickness, except in cases of fraud.
Providing coverage for preventive services. Recommended prevention and vaccination services will be covered without any deductibles or co-payments.
Spending premium dollars on care, not profits. Beginning in January 2011, insurance companies will be mandated to spend most premium dollars on care, not on profits and overhead.
Barnard says, “Insurance companies and employer plans have time lines to abide by; because the CCA plan is what is considered a grandfathered plan, this means that the earliest changes will impact the plan year beginning six months after the law's enactment. So, beginning April 1, 2011, we’ll see some of these changes in our employee plans. We will definitely communicate any changes to employees during Open Enrollment 2011.”
Changes in Store for Employees
CCA is committed to remaining an employer of choice. And part of that commitment is maintaining benefits that attract high-quality candidates and retain proven professionals.
“Health care reform will not change our drive to provide competitive benefits that support your health and wellness” says Brian Collins CCA executive vice president and chief human resources officer.
Aside from the reforms that will broadly affect health insurance companies, CCA Employee Benefits has identified a few changes scheduled to affect employees in the relatively near future. For example, some of the tax-related items take effect on January 1, 2011.
“For Flexible Spending Account (FSA) participants, over the counter (OTC) items will no longer be a reimbursable expense as of January 1,” Barnard says. “We are working with Ceridian to develop communications specifically for the FSA participants to let them know they need to spend their account dollars set aside for OTC items by December 31, 2010.”
Additionally, beginning in 2013, the limit on employee contributions to health care FSAs will be limited to $2,500 per year.
“CCA is following the legislative process closely and will keep employees informed about the developments,” Barnard says.
By K. Danielle Edwards
Correct Perspectives, July 2010