Health-Care Law Changing CUs’ Coverage

CUs can still be ‘an employer of choice.’

April 23, 2012

Regardless how the U.S. Supreme Court rules on the constitutionality of the Patient Protection and Affordable Care Act or the provision mandating that individuals purchase coverage, the health care reform law is changing how credit unions offer and fund employee health plans, CUNA Mutual Group’s Brad Pricer said Friday during the CUNA Human Resources/Training and Development Council Conference in San Antonio.

But Pricer, human resources process leader, said that shouldn’t prohibit credit unions and leagues from tailoring their benefit offerings and the platforms used for those offerings.

“The landscape is definitely changing, but credit unions will be able to take advantage of a post-health care reform environment while controlling costs and maintaining an ‘employer of choice’ strategy if they so choose,” he said.

Health-care insurance exchanges are moving forward and will continue to do so regardless of the Supreme Court’s decision, which is expected in June. Exchanges are meant to facilitate the purchase of health plans, making the process easier and more efficient.

Pricer said a common question he gets is whether credit unions will still need to sponsor health plans for employees due to the individual mandate (assuming it survives Supreme Court review). The answer is no, but if they didn’t they would have to pay a penalty under “play or pay” provisions.

The penalty tax will apply to certain businesses that either don’t offer health insurance to employees at certain levels of coverage and affordability, or don’t offer it at all.

Employers will likely follow their peers when deciding whether to offer coverage after exchanges are established by Jan. 1, 2014.  A 2011 HighRoads Pulse Survey indicated 80% of employers do not intend to drop health-care coverage in 2014, but 65% said they would if most companies in their industry did.

Subscribe to Credit Union Magazine“Whether your credit union should continue to provide coverage comes down to whether the businesses you are competing with to attract and retain employees decide to offer coverage,” he said. “If they do, and your credit union discontinues its plan, it will be more difficult to attract and retain talent.”

Credit unions that want to continue to promote an employer of choice strategy in attracting and retaining employees by continuing to offer health insurance may need to look at new ways of purchasing that coverage through state-sponsored or private exchanges.

Pricer said purchasing through exchanges and employing a defined contribution approach to funding is gaining momentum. A shift to a defined contribution approach moves the risk of incurring high health-care costs from employers to employees, and is similar to the previous shift with retirement plans, he added.

“Instead of providing a set of pre-defined health insurance benefits through one or two employer-sponsored plans, employers will provide a fixed amount of funding,” Pricer explained. “Employees will use that amount in an employer-sponsored exchange to help pay for the level of coverage they deem appropriate.”

While awaiting the Supreme Court decision, Pricer advised credit unions not to ignore health-care reform compliance requirements. “In my opinion, it’s highly unlikely that all health-care reform will be struck down even if the individual mandate falls.”

Either way, credit unions’ decision to offer health-care coverage in the future will likely be driven by affordability and whether a credit union embraces the philosophy of being an employer of choice to recruit and retain the best available talent.

Pricer encouraged attendees to visit CUNA Mutual’s website for timelines, legislative briefs, model notices and forms.