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Health Care & Insurance

Employers Catch a Break on New Health Laws

But even as regulators say they'll take it easy, a mountain of paperwork looms for firms.

Regulators are pledging to be lenient with employers on new health care rules. As long as firms make a good faith effort to comply, federal watchdogs will cut them slack on rules that kick in for plan years that started after Sept. 22. For most employers, that will be Jan. 1. For the next couple of years, regulators will rely less on enforcement and more on voluntary compliance, working with employers to make required changes. “We are not going to be going around slapping penalties on employers,” says Phyllis Borzi, assistant secretary of labor, at a benefits conference in Washington.

But with the ground rules unclear, even voluntary compliance is an enormous headache for employers, particularly those too small to have in-house human resources and legal experts to help sort through the complexities. “The reality is that, given where we are in the calendar, employers are simply not going to have all the answers for decisions for their 2011 plans,” says Tom Billet, a consultant with Towers Watson.

Here’s a rundown of the thorniest issues:

Annual dollar limits on benefits. Caps on “essential health benefits” phase out starting Sept. 23 and finishing on Jan. 1, 2014. But what will be defined as essential hasn’t been spelled out, leaving employers pondering whether high-cost benefits, such as fertility treatment, will be included. The likely fix for most firms: Substitute limits on the number of doctor visits or treatments in place of a cap on the dollar amount shelled out.


Preventive services. Nongrandfathered plans -- those that started after March 23 or were significantly altered after that date -- must provide free services based on recommendations from a government task force. But the recommendations leave many unanswered questions. For example, the task force calls for women aged 65 and older to be screened routinely for osteoporosis but says nothing about the frequency of screening. A recommendation for counseling for smokers says nothing about whether smoking cessation aids must be covered.

External appeals. Self-insured, nongrandfathered plans must contract with at least three independent review organizations (IROs) to handle final benefit appeals. But there are only 43 accredited IROs in the nation, and many of them are limited in scope. Odds are regulators will let employers use other ways to ensure reviews are fair.

Some tinkering with the rules, and the law itself, is likely in coming months. Regulators are showing some willingness to reconsider proposals when employers can demonstrate that the outcomes will be onerous or counterproductive.

One good bet is the easing of a tax-reporting provision that hits businesses. Both Republicans and Democrats recognize that requiring reports of transactions with vendors if their annual value tops $600 a year will unduly burden businesses.

But don’t expect outright repeal of the legislation, despite likely GOP gains in Congress this November. Republicans still won’t have the firepower to override a sure veto.