HEW Hewitt Associates

Many employers sorting out the details of the new U.S. health care overhaul are deciding it will be better for them to embrace the benefit requirements kicking in soon rather than grandfather their existing medical plans and forestall or avoid some of the changes, as doing so will allow them more room to raise employees' share of rising health-care costs.

While employers opting not to grandfather their health plans will soon have to cover all the costs for certain preventive care services, among other requirements, they will also have more flexibility to increase their workers' financial responsibility for premiums and medical bills than those who choose to maintain existing coverage.

Many employers do plan to keep existing plans under the health overhaul's grandfather provisions, at least for 2011. Others, though, are signaling they are ready to adopt the law's new benefit requirements as soon as they can.

"Most of the employers that I've talked to...are deciding to forgo grandfathering," said Thomas Richards, senior vice president for U.S. products at Cigna Corp. (CI), where he oversees the insurer's implementation of the overhaul. "I think the reality is the math works better for them to make the changes to their plans."

Grandfathered and nongrandfathered plans alike soon will have to meet certain requirements, such as eliminating lifetime dollar limits on essential health benefits and covering children up to age 19 regardless of pre-existing conditions. Both types of plans will have to meet new minimums for spending on patient care as of 2011, and to meet other requirements in 2014, when the law goes into full swing.

Losing grandfathered status will place some additional requirements on employer plans next year, such as the greater coverage requirement for preventive care, noted Tracy Watts, a partner in the health and benefits segment of Mercer LLC consultants, part of Marsh & McLennan Cos. (MMC). Grandfathered plans can maintain cost-sharing for preventive care and need not cover the same services as other plans, according to Mercer.

Grandfathered plans, however, will have a relatively limited ability to increase employee deductibles, out-of-pocket maximums or premium cost-sharing, and employers who want to grandfather coverage can't reduce benefits or change carriers. Employers can forgo those restrictions and have more flexibility to boost employees' share of the health-care financial load by transitioning to the new overhaul coverage requirements.

Nearly half of the employers in a recent Mercer survey said at least one of their health plans will lose grandfathered status as of 2011. At the same time, Mercer found that 57% of employers nationally plan to increase employees' contributions to health insurance premiums, as a percentage, in 2011.

Employers expect their health-care costs to increase by some 10% next year, with the health care overhaul accounting for 2% of that increase, according to Mercer. Companies, however, anticipate that other changes they make, including boosting employee cost-sharing and adding health-management and wellness programs, will hold the increase to 6%.

Mercer, which questioned more than 1,000 employers of various sizes across various industries, said 68% plan to maintain grandfathered status in 2011 on all or some of their employee health plans; a third of those businesses expect to transition in 2012 to plans that must comply with the new benefits provisions.

Hewitt Associates (HEW), another benefits consultant, also sees companies opting not to preserve existing plans. Hewitt released survey results earlier this month showing that 90% of large employers anticipate losing grandfathered status by 2014, with the majority expecting to make the move within the next two years.

Many large companies already comply with many requirements for nongrandfathered plans and would prefer the flexibility to change their benefit programs, Ken Sperling, the leader of Hewitt's health management practice, said at the time.

That is not to say there is no interest in keeping existing coverage. Ken Goulet, president and chief executive of the commercial business segment at health insurer WellPoint Inc. (WLP), said many national employers aren't changing carriers for 2011. He believes they are staying put, for now, with grandfathering in mind.

While significant aspects of the overhaul go into effect on Sept. 23, 2010, and Jan. 1, 2011, the law anticipates going into full swing in 2014, when individuals will be able to purchase coverage, regardless of pre-existing conditions, through health exchanges. At least 32 million uninsured Americans are expected to gain coverage as a result of the law.

-By Dinah Wisenberg Brin, Dow Jones Newswires, 215-656-8285; dinah.brin@dowjones.com

Hewitt Assoc A (NYSE:HEW)
Gráfica de Acción Histórica
De May 2024 a Jun 2024

Hewitt Assoc A (NYSE:HEW)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024