Implementing the health law

“Oh!”

Diana Clapper gave a little gasp at what she just heard:

Under the new health care law, parents will be able to retain a child on their insurance policy up to age 26 even if the child is married.

That married-child provision is another health care benefits surprise for Clapper, administrator for human resources and benefits at Godfather's Pizza. She was one of 35 business executives who gathered recently at the Omaha Marriott to find out what the new law means to their businesses.

Now that health care legislation has worked its way through the political process, it primarily will fall to America's businesses to turn law into reality. Employers supply most Americans with health insurance as part of the benefits that go with their jobs.

Human resources officers, budget administrators, insurance brokers, owners of small businesses and others are trying to learn what they will need to do and the financial impact of the new law, which puts some provisions into place this year and adds more through 2018.

Those at the Marriott meeting, sponsored by benefits broker Aon Consulting, jotted down notes as they watched an Internet “webinar” presented by company executives who followed the legislation's progress over the past year.

A sort of slight chuckle went through the room when an Aon executive said the law requires companies to explain parts of the law to their employees in a document with at least 12-point type, no more than four pages, with “culturally and linguistically appropriate” wording.

While some provisions of the new law are clear, said Tom Lerche of Chicago, leader of Aon's health care practice, many are vague, expressing only the intent of Congress but not the details of how to get there. Many of the answers will come as the Department of Health and Human Services writes regulations to carry out the law, a process already under way that probably will continue at least through the end of this year.

“That's a gray area,” Lerche said more than once in response to questions. “We know that each of you will have questions that cannot be answered without the regulations.”

Among those questions:

--Large employers must pay an annual penalty of $3,000 per employee starting in 2014 if more than 9.5 percent of their workers' household income goes for health coverage. How does an employer determine employees' household income?

--How are part-time employees counted to determine which rules apply?

--What happens to insurance coverage for people who retire before age 65?

--How does an employer know if an employee's child qualifies for another group plan and thus should not be allowed to remain on the parent's company policy until age 26?

To the last question, Lerche said that apparently the honor system will apply to children who want to stay on their parents' policies. If the young people say they don't qualify elsewhere, the parents' plans will have to keep them.

The rule that requires insurers to cover children with pre-existing medical conditions goes into effect in September, which for group plans would apply to the start of a company's next insurance contract, commonly Jan.1, 2011, Lerche said.

Human resources officers will be giving advice as the regulations are written, said Lisa Horn, manager of health care policy for the Society for Human Resource Management in Alexandria, Va., an industry group that encourages its 250,000 members to help shape public policy.

“Our members have unique insight into the inner workings of workplace benefits,” the former Nebraskan said. “This really is the critical part of the public policy. Our members want to make the implementation process as smooth as possible.”

The national group favored health care reform if it was “done the right way,” Horn said. It opposed the bill passed by the House of Representatives and was neutral on the Senate bill and the final legislation.

“Our No. 1 message to HR professionals is to get familiar with the law,” she said. “Then they can take the next step and determine how the law's requirements are going to impact their health plans. This will continue many years down the road.”

Peggy Noll, a board member of the Human Resources Association of the Midlands, one of 575 affiliates of the national group, said she opposed the legislation because said it will disrupt companies' financial plans. Noll owns Noll Human Resources Services, a consulting and temporary employment company.

“It's so enormous that it's going to be a continuous trickle of new things that are going to have to be done differently,” she said. “In this instance, the government is coming in and imposing regulations that totally change the company's formula. If one thing costs more, then do wages go down? When you start messing around with that stuff, you have unintended consequences.”

An example of unintended consequences, Noll said, is the requirement starting in 2014 that businesses offer insurance to all employees within 90 days. Companies that hire temporary employees might keep them only 89 days, resulting in additional unemployment, she said.

Overall, she said, “we expect health insurance premiums to go up in 2011,” largely because of provisions allowing children to stay on their parents' insurance plans longer and banning lifetime benefit limits by insurers.

Kim Savicky and Sarah Marie Livingston, chief administrative officer and human resources director, respectively, for the College of St. Mary in Omaha, said they came to the Aon session to get information. Savicky said she was opposed to the law while it was being debated.

“Now that it's out, I am trying to learn about it,” she said. “OK, how does this really impact me and the college? Now this is something we're going to have to live with.”

She is helping to prepare the college's 2010-2011 budget and needs to estimate insurance costs for the 150 employees and their families. So far, Savicky said, she doesn't have a good idea about the projected cost.

For now the only thing a business can do for its employees is let them know that there may be changes and that they will be informed as details are available, said Dr. Margaret Lewin, medical director for Cinergy Health & Life, an insurance company in Sunrise, Fla.

“It's important for HR people to assure their employees that they're on top of it and maybe set some benchmarks for when they can do some small meetings or news releases,” Lewin said. “There were so many last-minute changes that were made (in the bill before it became law).

“In anything this size, there's going to be contradictions within it that are going to have to be ironed out. We need some time for the plan to open up its information.”

Executives should look to their professional organizations for guidance, she said. Those organizations can obtain accurate information and share it with their members so that businesses take the proper steps with some uniformity.

Specific provisions can differ according to the size of the business and other factors.

For example, the most immediate change for businesses with fewer than 25 employees is a new tax credit designed to help them afford insurance, Lewin said. Broader provisions come later, including big changes in 2014 such as the requirement that businesses provide insurance or pay penalties.

For most employees already insured, Lewin said, the law will cause few immediate changes, and they could end up benefiting workers.

Clapper, from Godfather's, said she will implement the law for corporate employees and for the chain's company-owned locations. She also hopes to provide information to the company's franchisees around the country, who operate as separate small businesses but who look to the parent company for guidance.

“We'll get it under control somewhere down the line.”

Contact the writer:

444-1080, steve.jordon@owh.com

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