‘Using Recent Employment Changes to Market Contracting’ Series, Part 3

July 28, 2010
5 min read
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The previous blog post in this series focused on how to navigate in an environment where employers are continually trying to reduce healthcare costs while job-seekers are placing affordable healthcare at the top of their priority list. To further complicate the issue, the recently passed Healthcare Reform, with its additional administrative burdens and potential cost increases, is making benefits an even bigger thorn in employers’ sides.The Healthcare Reform encompasses two new laws and a Patient Bill of Rights that will place new requirements on employers over the next four years. The goal is to make sure all Americans have access to healthcare. To that end, the reform is requiring plans to remove many limits and exclusions. For example, by October 1st of this year, plans must provide coverage to participants’ dependents up to age 26. They no longer have to be enrolled in college, and they can even be married! The reform is also requiring the removal of lifetime and annual dollar limits, the prohibition of pre-existing condition exclusions, and more. Eventually, employers will even have to pay a penalty for not offering coverage or for offering unaffordable coverage. How this will affect employer costs is uncertain, but it doesn’t take a genius to figure out that the more claims an insurance company has to pay, the more the costs will go up.But cost isn’t the only factor worrying employers. There’s also the added administrative burden. Here are just a few new requirements that will force employers to create new policies and procedures:

  • The new Community Living Assistance Services and Supports Act (CLASS Act) – The law creates a national social insurance program that provides limited long-term care coverage for active employees through the workplace. Beginning in January 2011, employers must automatically enroll employees in this plan and have procedures to allow workers to opt out.
  • New reporting requirements, including the mandate that insurance contributions must be tracked and reported on employee W-2s, effective January 2012 for benefits provided in 2011.
  • The creation of State Exchanges – Starting in 2014, if an individual’s employer doesn’t offer insurance or it is unaffordable, they will be able to buy insurance directly in a State Exchange.

Employers will have to create a system to provide “Free Choice Vouchers” for employees who qualify for the State Exchanges.Add to all of this that the requirements are constantly changing, and you have a lot of executives and HR departments about ready to pull their hair out. So how can you help? By offering contracting! By hiring their workers on a contract basis through you, your clients can outsource the employment burden of those workers to a back-office service provider, such as FoxHire, which will then be responsible for shouldering any additional costs and administrative burdens that come from this reform. FoxHire is already working with its insurance brokers and legal experts to navigate this complicated reform and will be in compliance with each of the requirements as mandated.

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