Prepping: Not Necessarily for Doomsday, but for the Supreme Court’s Decision

Just last week, the Supreme Court Justices concluded hearing 3 days of arguments around the constitutionality of the individual mandate in the Patient Protection and Affordable Care Act (PPACA). On Friday, they were behind closed doors determining the fate of this historic legislation. Scheduling three days to hear oral arguments is unprecedented and signals the Court’s understanding that this ruling is just as much a landmark decision as the ruling on Social Security in 1937.
While the Justices may already know the outcome, we likely won’t know their decision until June. Many in the media have predicted they will rule the mandate unconstitutional by a 5/4 split based on the questions asked by the Justices. How they will actually rule is really anyone’s guess. One thing is certain – the implications could be enormous.
If a ruling is handed down in favor of the individual mandate, employers will have to continue implementing plan changes as further guidance for specific provisions is released by the Department of Labor (DOL), Health & Human Services (HHS) and the IRS.  The next opportunity to implement significant changes to the existing law will be dependent on the outcome of the 2012 election.
If the individual mandate is declared unconstitutional, but the rest of PPACA stands, watch for political scrambling to make necessary changes to the law as a result. Many believe if the individual mandate is struck down, the rest of the law will crumble due to the inability to spread risk across the majority. Starting in 2014, PPACA will not allow for denial of coverage or higher rating for those with preexisting conditions. Without the individual mandate, individuals could wait to enroll in a plan until they become ill.
Think of what our car insurance premiums would be if we all waited to purchase coverage until after we had an accident.  If the individual mandate is found unconstitutional and results in the entire law being struck down, it will create upheaval in the marketplace and uncertainty. The mandate is still unpopular with individuals, however, some provisions, such as covering dependents to age 26 and preventive care coverage, are popular. Employers would breathe a sigh of relief since they would no longer have to worry about the employer penalties for not offering coverage or offering coverage that is deemed too expensive.
The political fall-out from the ruling could be unlike anything witnessed by current generations in the workplace. If left unchanged, PPACA will impact how companies do business, change how healthcare is delivered, and set the bar for the government to have greater control over individual decisions.
Regardless of the direction the pendulum swings, it is clear that employers need to continue to take action to control their costs, such as:

• Implementing wellness programs that affect behavioral changes – Wellness programs come in all shapes and sizes and are not created equal. Crafting a program to fit your company demographics while driving costs down requires a well thought-out plan.
• Benchmarking benefit plan design to market – Employee benefit programs should be designed to match the company’s existing culture and demographics, and be considered when strategically planning for the culture and demographics of the future.
• Evaluating employee contribution strategy – Employers need to look at their benefits program as an integral part of employee “total rewards”. For example, an employer may offer above-market contributions to health premium, however, salary and other benefits could fall below market. An effective employee benefits program takes these factors into consideration.
• Verifying dependents on your plan – Most companies take a look at their monthly bill to make sure they are not being billed for terminated employees. Few actually audit for ineligible dependents on the plan. Without requiring proof of dependent status, companies are unknowingly covering divorced spouses, grandchildren, nieces/nephews, girlfriends/boyfriends and so on.

In this time of uncertainty over the changing benefits landscape, employers can and should still forge ahead with cost-saving measures.