Health care costs seem to continue on an upward spiral each year, and to combat this, the Department of Health and Human Services has formed a health care exchange system as part of the Patient Protection and Affordable Care Act.
The health care exchange system is designed to provide an affordable coverage option, but like any government program, it has mixed reviews, especially among employers. Is it cheaper to drop coverage and leave employees to the health care exchange system? What are the consequences of doing so? These are some of the questions human resources departments are evaluating.
How exchanges can affect employers
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For companies that do plan on dropping their employees to the health care exchange system, there could be repercussions, says Anna Frank, human resources generalist of Air Ambulance Specialists Inc. in Denver. Major changes to any benefits program typically causes confusion among employees, and HR departments must be ready for the questions and problems that are bound to come.
In fact, Air Ambulance Specialists recently experienced this firsthand, Frank says, when it implemented a new mail-order pharmacy program for maintenance prescriptions. The change was difficult for many employees to embrace – and that's just one element of Air Ambulance Specialists' benefits program. Switching to the health exchange system completely changes the game, and employees will need guidance on how the new system affects their coverage.
"I would hope employers still would see the struggle employees are going to have with it and still work with them for at least the next couple of years after 2014," Frank says. "A lot of people just struggle with change, and that includes figuring out your benefits."
Besides the initial confusion, Frank also believes companies relying on the exchange system might have trouble attracting top talent because benefits play a key role in both attracting and attaining employees.
"One of the first two things people talk about is your pay and the benefits," Frank says. "Whether it's medical, dental or wellness related, like discounts for fitness club or anything like that, benefits are important."
Because a company opted for the exchange system, competitors can potentially enjoy an advantage when it comes to attracting the most in-demand industry professionals, Frank adds. Without a comprehensive health care package, prospects could choose to take their talents elsewhere, and competitors are often the ones reaping the benefits.
"Talented people realize the value of benefits offered by an employer, and if that company is dropping to the exchange, then there's a potential they might go to another competing company that is not changing over," Frank says.
Staying current on reform education
In 2010 and 2011, the Society for Human Resource Management conducted a survey that examined where HR departments are in their health care reform decision-making process. The survey states that 51 percent of employers do not plan on dropping their health care coverage in lieu of moving to the exchange system while 48 percent of employers are still waiting on regulatory guidance before making a decision, suggesting education is an important component to tackling health care reform.
The SHRM survey also reveals that 54 percent of HR professionals in 2011 feel comfortable with their understanding of health care reform. While 54 percent may sound like a high figure, this also means 46 percent of HR professionals are uncomfortable with their knowledge on health care reform. Employers are turning to their HR departments for guidance during this confusing time and not having answers won't cut it.
To prepare for 2014 when PPACA takes full effect, Frank is trying to gain as much knowledge on the latest regulations and legal interpretations as she can absorb, she says. Frank primarily replies on Air Ambulance Specialists' benefits department to keep her updated, but there are also other resources available to HR professionals.
Benefits brokers, in particular, are helpful educational resources to HR professionals. According to the SHRM survey, 69 percent of HR professionals in 2011 are turning to benefits brokers for information on health care reform. Though that figure is a dip from 2010's 73 percent, benefits brokers are still the most widely used educational resource in the HR industry for health care reform information.
The SHRM survey also lists itself as a primary resource at 47 percent and legal counsel at 50 percent. Consultants are used as an educational resource by 45 percent of HR professionals, and internal exerts come in at 30 percent.
No matter what educational avenue is used, staying informed is necessary for any HR professional. In a year, everything that is now true might no longer be an issue, and with this rapidly changing environment, there isn't much room for outdated information and uneducated decisions.
More coverage on health exchanges from BenefitsPro.com
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