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Navigating the New Health Care Landscape

CONTRIBUTED BY JEFF CALDER

Health Care Reform, Obamacare, Affordable Care Act– no matter what you call it, businesses will venture into new territory come 2014.

For many employers, its business as usual – employees will continue to access health benefits as an incentive for employment, with the employer shouldering much of the cost. For other companies, however, the evolving Affordable Care Act landscape poses a material threat to their bottom line through significant operational and financial challenges which can hurt their ability to grow and compete.

To prepare for January 1, 2014, employers may need to address 3 key challenges:

Maintaining the Bottom Line

ACA aside, health care costs are expected to more than double over the next five years. In 2008, actuaries for the Centers for Medicare and Medicaid Services (CMS) projected that national health care spending would nearly double to $4.4 trillion by 2018. Between 2008 and 2018, total health expenditures are expected to exceed GDP by an average of 2.1% annually.

Penalties, taxes and fees… oh my! If an employer chooses not to offer coverage or if they offer coverage that does not meet minimum value requirements, or is deemed unaffordable, they may be expected to pay penalties per full-time employee, depending upon the number of employees within their organization.

Employers should be proactive and model different scenarios to project the impact of fees, taxes and the possibility of adding new members to their plan in order to prepare for the financial impact of health care reform.

 Operational and Compliance Distractions

The implementation of more than 70,000 pages of reform regulation will cause an unknown compliance and regulatory burden on most organizations. Understanding, applying and remaining compliant within the law will pose a significant threat to an employer’s core business operations and create an unwanted diversion.

Consider leaning on business partners to provide support for the upcoming onslaught of compliance and regulatory tasks. If your employee benefits broker doesn’t provide compliance support – find one that does.

 Human Capital Concerns

For some organizations, health care reform will determine an employer’s ability to hire, grow and ultimately succeed in the marketplace. Successfully attracting, retaining and compensating employees during this pivotal time will ensure a strong future and differentiate organizations among the competition.

The human impact is undoubtedly critical to navigating the new system successfully. Any strategy must ensure that the cost does not trump the satisfaction of your workforce or your ability to attract and retain talent. From a management standpoint, health care reform will require new cooperation between Chief Financial Officers and Human Resources Departments. The reason: Health care reform will have a material impact on the bottom line and your people.

For all employers, determining a health care reform strategy needs to be a top priority. The keys to successfully navigating the new health care system and building a long-term strategy lie in managing the financial, operational and human capital challenges ahead.

Jeff Calder is a Principal at Barney & Barney and leads the firm’s Employee Benefits Division in the Bay Area.

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