Employers will face the mother of all migraines when Congress passes a health care bill, probably early next year in a very close vote. Many new problems are in store for federal and state regulators as well. They’ll need to write rules to flesh out the law, set guidelines for implementation and create a mechanism for oversight and enforcement.
Among tasks employers will likely face under the eventual bill:
-- Redesign health plans to eliminate annual and lifetime benefit caps and to extend coverage to 100% of preventive health care costs for employees.
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-- Help enroll workers in long-term care plans and collect premiums for this new federal insurance. However, firms or employees can opt not to participate.
-- Assign a value to benefits -- medical, dental and vision care plus contributions to savings plans -- for each worker and report it on employees’ W-2 forms.
This last task could trigger new taxes. If plans are too rich, Uncle Sam will impose a levy. If they’re not rich enough, a penalty of one kind or another. Only small businesses will be exempt.
Adding insult to injury, firms will have to calculate their penalties and fees. One example: Large and midsize employers that don’t offer insurance will need to assess how many of their low and middle income workers will get federal subsidies for the insurance they’ll buy on new private insurance exchanges. That number will be used to determine the fees they owe to help offset government subsidy costs. The employers will also have to deduct premiums from paychecks and forward them to the exchanges.
Other employer responsibilities:
-- Ensure taxes are paid on high-value plans. Although the tax falls on insurers, employers will have to tell plan administrators. And if the tax isn’t paid, it’s the company, not the insurer, that will be penalized.
-- Overhaul flexible spending plans, setting caps of no more than $2,500 per year and barring reimbursements for the purchase of over-the-counter drugs.
-- Employers will want to rethink retiree drug coverage, too. Federal subsidies for providing such coverage will now be taxed, making drug plans more expensive.
Others will face new burdens too: Insurers will have to provide information on everyone they cover so Washington can determine if an individual owes a penalty.
The IRS will be saddled with enforcement, having to match up information from insurers, firms and individuals and assess and collect fees and taxes accordingly. Few think the IRS can handle the task without a lot of additional funding and staff.
And states will be required to expand Medicaid and coordinate that program with insurance exchanges. State officials will also have to report on premium trends and make recommendations on which plans should be excluded from the exchanges.
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