Health-Care Reform Offers Opportunities

Like it or loathe it, the Affordable Care Act has arrived—so make it work for your CU.

August 1, 2013

Last month the Obama administration delayed until January 2015 a key provision of the Patient Protection and Affordable Care Act (ACA). That’s when companies with the equivalent of more than 50 full-time employees would face a penalty if they don’t provide health insurance.

While health-care reform means new oversights, obligations, and work, it can create opportunities for credit unions prepared to harness them.

Besides—you don’t really have a choice. Although the delay affects one provision of the law, many others already are in effect. Follow these five steps to take advantage of the opportunities health-care reform can offer your credit union:

1. Don’t wait. The first step is simply to get going. Many employers, including some credit unions, stalled on implementing the ACA while awaiting the outcome of the 2012 presidential election. Many believed if Mitt Romney won, he would have repealed healthcare reform and the requirements already in force.

But no amount of hand-wringing or political rhetoric will repeal the ACA now. It’s time to comply and adjust attitudes, if necessary. Credit unions with a firm grasp on their health-care benefit strategies are already moving ahead—or are at least ready to start—with assessing and implementing existing and upcoming requirements.

Credit unions that successfully handle the reforms will recognize the new opportunities that come with the new responsibilities.

2. Review health-care plans. Ensure your current health-care offerings meet federal requirements. The Labor Department has started to audit employer-sponsored plans. Audits are in the early stages, and credit unions don’t appear to have any issues. But these spot-checks are a good reminder the government will hold employers accountable for meeting ACA requirements. The department has been ramping up staff to expand its auditing capacity, so prepare accordingly.

Don’t assume your plan is compliant. Credit unions are known for offering robust benefits packages. But just because employees like their health-care coverage doesn’t mean their plan meets ACA requirements. It’s prudent for all credit unions— even those with high-quality health insurance—to review their plans to ensure compliance.

Most health-care brokers or consultants will assist credit unions with compliance. Keep this in mind: While insurance carriers might claim their plans are ACA-compliant, you must conduct your due diligence.

Some ACA requirements have already started or will soon take effect. For example, as of Oct. 1, 2013—a deadline that, as of press time, wasn’t affected by the delay of the penalty provision—all employers must provide employees with notice of what public exchanges exist. Women’s preventive health-care requirements might require plan alterations or additions, and you must remove any limits on what ACA considers essential benefits. This last requirement is true even for plans with very high limits on specific coverages. At a minimum, prepare and vet certain notices, or tailor boilerplate documents carriers provided.

►3. Consider opportunities. Nothing will silence naysayers who adamantly oppose health-care reform, but their protests are largely moot at this point. Instead of focusing on how reform is hamstringing employers, credit union leadership could seek out a silver lining.

The rise of public exchanges and the increased demand for private exchanges present a new option for credit unions to switch their benefits plans from a defined benefit model to a defined contribution model. This shift is similar to what most employers did with retirement plans. It enables credit unions to better control costs, which has been difficult with the unpredictable annual increases many employers faced in the past decade.

Credit unions pursuing the defined contribution approach would determine a health-care benefit amount to award employees as part of their compensation. Employees could then shop the exchanges the credit union elects, finding coverage that best meets their needs.

Private plans likely will be more robust and offer more choices. Employees could elect additional highly personalized plans offering enhanced protection for certain medical conditions or lifestyle needs, such as extended cancer coverage or pet insurance. Likewise, employees might choose a leaner plan. Because of personal penalties for not electing coverage, employees have no incentive to forgo coverage altogether.

Using a private exchange along with a defined contribution approach also removes credit unions from administering health-care benefits. This will allow you to reallocate staff time to other priorities.

4. Choose wisely. Credit unions switching to exchanges should choose a private exchange that offers the quality employees expect. Employees will continue to have questions and issues with their plans and will continue to use work time to resolve them. Customer service difficulties, administrative hassles, and coverage battles will diminish employee productivity and morale.

Exchanges also might make it more difficult for employees to share information and advice from coworkers because many will be on different plans. They’ll have to rely on more formal customer service call centers or email.

Rely on brokers and consultants when exploring exchange options. Private exchanges often lack track records, so credit unions must negotiate how to handle employee disputes and ensure safeguards and guarantees are in place so these arrangements benefit all involved parties.

Failure to do so could result in increased turnover and decreased productivity. But a good choice could lead to a better use of resources and a boost to your bottom line.

5. Communicate well. Many credit unions use the strength of their benefits to compete for talent. Employees could perceive your moving to an exchange as a bold departure from your longstanding tradition of providing the best health-care and retirement offerings.

Design and implement thoughtful, honest, and optimistic employee communications. Assuage concerns and assure employees that a defined contribution approach will enable them to maintain or even enrich their health-care coverage.

Communications must balance nuts-and-bolts operational messaging with promotion. Honesty is key. Explain to employees the move is motivated in part by controlling and better predicting costs. But by moving to exchanges, credit unions can maintain high-quality programs while expanding options for employees, who’ll have far more choice and flexibility than ever before.

At a time when most healthcare stories can be pessimistic, credit unions have an opportunity to frame the discussion and make a potential shift to an exchange a positive outcome for their employees.

BRAD PRICER is senior manager, CUNA Mutual Group employee benefits product management.

ANNETTE BECHTOLD is senior vice president of regulatory affairs and reform initiatives with Digital Benefit Advisors.