Against the backdrop of healthcare reform, planning and prioritizing for open enrollment is more crucial than ever.
Whatever the ultimate fate of the Affordable Care Act (Republican presidential nominee Mitt Romney has vowed to make repealing the law one of his first actions should he be elected), healthcare reform is now the law of the land, looming large for employers and benefits managers in this fall's open-enrollment period. Against the ACA's backdrop, solid planning and prioritization -- always important for benefits strategy -- may prove even more complex and daunting for many plan sponsors.
Indeed, best-in-class health-benefit strategies place a very strong emphasis on flawless implementation and administration, especially during open enrollment. With the short- and long-term impact of healthcare reform top of mind, a strategic checklist can bring into focus the broader array of issues and ideas that plan sponsors need to consider well in advance of engaging participants in their health programs. The goal for HR leaders should be to organize and prioritize key initiatives that, in combination, can ensure a successful open-enrollment season for participants, employers and the vendors that support them.
Getting Down to Business
While this checklist is based on experience in helping plan sponsors design, communicate and administer health-benefit programs, it also draws on some key findings from the 2011 Mercer Workplace Survey, an annual study of employees who participate in their employer's company-sponsored health and 401(k) plans (responses are based on a national cross-section of 1,507 active participants interviewed online between June 16 and July 1, 2011). In addition, we polled more than 4,000 employers immediately following the Supreme Court's June decision upholding ACA. With these surveys as something of a statistical guide, then, the following strategic staples should serve employers well in 2013 and beyond:
* Use open enrollment to reinforce the value of your health and benefits program. Employees clearly appreciate their employer-sponsored benefits; 79 percent of survey respondents say their benefits are one of the primary reasons they work where they do, and 91 percent say that getting health benefits through work is just as important as getting a salary. Open enrollment is, therefore, a great opportunity to promote the tools and educational materials that help employees make better enrollment decisions. For many employers, these include total reward statements that explain the monetary value of company-provided health benefits, and how they are calculated.
* Understand the implications and scenarios of healthcare reform. Even before the recent Supreme Court ruling on the federal healthcare-reform law, more than one-third (36 percent) of workers responding to the Workplace Survey expected employers to change health-plan benefits due to healthcare reform -- more than double the level reported one year earlier. Obviously, employers should work with their consultants, administrators and other stakeholders now in order to finalize all the requirements to be in compliance with the law and allow enough time to implement and communicate plan changes.
Let's take some time to explore this: For starters, employers should conduct a "healthcare-reform check-up" to assess the impact of the law on their benefits and business strategies, systems and administrative processes. The imperative for employers and their benefits providers is to ensure that the complexities of the law's requirements are effectively and efficiently administered.
These requirements are a matter of record, of course, and readily available from government and benefit-provider sources. However, in many cases, employers are still catching up with the details. In the Mercer poll of more than 4,000 employers, the majority said they had been waiting for the Supreme Court's decision before developing a strategy to respond to the law's major provisions -- which include the individual mandate requiring the purchase of health insurance, and employer penalties related to employee coverage -- that are slated to go into effect in 2014 and beyond.
In the poll, almost all employers said they will begin or continue taking action now that the court has ruled. The fact remains that employers should act quickly to implement new requirements for 2012 and 2013, such as providing benefit-summary disclosures; reporting health coverage on 2012 W-2 forms; complying with new dollar limits on healthcare flexible-spending arrangements; and implementing increased Medicare withholding for high earners.
In 2014, ACA rules go into effect aimed at expanding access to healthcare, and these will have broader implications for companies. More than one fourth of the polled respondents (28 percent) said complying with the new requirement that employees who work an average of 30 or more hours per week must be eligible for coverage will present a "significant challenge" for their organization.
As a result, employers with large part-time populations, such as retailers and healthcare organizations, are faced with the difficult choice of either increasing the number of employees eligible for coverage, or changing their workforce strategy so employees work fewer hours. With the average cost of health coverage now exceeding $10,000 per employee, a big jump in enrollment is just not economically feasible for many companies.
Meanwhile, the law's requirement to auto-enroll newly eligible employees in a health plan -- which means that employees will automatically be covered unless they take action to opt out -- is also expected to increase the rolls of the insured. About one-third (29 percent) of respondents said this will be a significant challenge, especially because other ACA provisions will limit the amount of health-plan costs that can be passed along to employees through higher premiums or deductibles.
As for which provision worries most of the respondents (47 percent), it's the excise tax on high-cost plans, expected to go into effect in 2018. Employers that are already struggling with annual healthcare-cost increases that can be as high as double or triple the general inflation are determined to avoid this tax.
Indeed, there's a lot of interest in cost-saving measures, such as consumer-directed health plans and employee health management, since the tax was proposed. In fact, 54 percent of those polled said they planned to be more aggressive about managing plan costs, going forward, now that health reform has been affirmed by the Supreme Court (the 41 percent that did not plan to do so were already taking aggressive action to manage expenses).
The following checklist of strategies will aid employers in achieving these goals and rising to the implementation challenge:
* Leverage online/electronic communications. Ninety percent of the employees at Mercer's health-and-benefits administration clients enrolled online during the 2012 open-enrollment period. Given that employees are receptive to receiving information online, consider also the cost savings from using e-delivery of open- enrollment materials. Other electronic communications, such as personalized emails, micro-sites and text messages, have proven both popular and effective at driving informed employee- enrollment behaviors.
* Consider adding a wellness program Employees are increasingly appreciative of, and engaged with, wellness programs. Of the 61 percent of Workplace Survey respondents who report that their company offers such a benefit, 30 percent say they take advantage of it "a great deal," up significantly from 23 percent in 2010. These programs provide effective forums for driving employee appreciation for, and adoption of, healthy behaviors, improving both employee engagement and the bottom line.
* Move ahead of the crowd. The vast majority of our health-and-benefits administration clients have their open-enrollment windows start and/or end between the last week of October and the first two weeks of November. Consider when you offer your window to allow ample time for critical post-enrollment deliverables such as ID cards and targeted communication and education, particularly as related to health care reform.
A Complex Reality
The realities of the health-reform era bring new choices to light for employers. They can simply choose to "pay" -- that is, to exit the system, stop offering health plans and pay employees to buy from state exchanges. Or, they can "play" -- aggressively managing healthcare costs and moving toward more of a defined-contribution health approach, redefining the healthcare roles of employer and employee, and funding and facilitating healthcare for employees rather than managing plans themselves.
To those ends, providers are offering innovative programs -- for example, allowing self-funded employers with 3,000-plus employees to enroll their workers in new medical plans (starting Jan. 1, 2013) designed to save on medical-plan costs with the same plan design currently in place. The savings come from select networks with providers chosen for their quality and cost- effectiveness.
In addition, there are new decision-making support tools designed to help organizations with 100 to 1,000 employees offer workers more options with less administrative responsibility. Through such programs, employers can, for example, contribute a set amount to a health reimbursement account; employees then select the coverage that is best for them using an online decision-support and enrollment tool.
Throughout the strategic process we've outlined with our checklist, it's important to consider the competitive impact of other employers' changing strategies, and how they may affect the attraction and retention of employees. Amidst the challenges of today, focusing on program management will help in dealing with the eventualities of tomorrow.
For employers, that means a continuing emphasis on consumer engagement and accountability, health improvement, care management and quality providers. As open-enrollment season takes on a new urgency in the face of ACA's complex reality, it's time for organizations to view the reform era as an opportunity -- and not merely as a burden.
Sharon Cunninghis is Mercer's United States Health & Benefits Regional Business Leader and is based in New York. She is also an actuary and senior partner. Tracy Watts is a partner in Mercer's Washington office. A consultant with Mercer for 25 years, she is the clients solutions leader for the health and benefits business in the southern region of the United States. She also is a national leader for Mercer's healthcare-reform resources. Rich VanThournout is the health and benefits business leader for Mercer's outsourcing business, responsible for management, strategic direction and product development. He is based in Mercer's Deerfield, Ill., office.
See these findings from the Mercer Workplace Survey.