Evolving legislation continues to steer the U.S. health care industry, leaving some businesses struggling to stay afloat. Two factors, the Cadillac tax and private exchanges, are making a particular splash, providing brokers with a pivotal part to play as benefits navigators to help employers weather the shifting waves of change.
Keep clients on board the benefits boat
An annual excise tax on high-cost employer-sponsored health insurance known as the Cadillac tax has been top of mind for employers, who are unsure of how it will affect their businesses. As it stands, it will impose a 40 percent tax on the portion of a health care plan that exceeds the threshold of $10,200 a year for individuals or $27,500 for families. Though it won’t begin until 2020, and regulations may still change, many want to brace themselves for the tax’s potential impact — or avoid it altogether.
One major concern is whether the tax could lead to the end of pretax benefits like HSAs or FSAs, because these types of benefits are included in the overall tax calculation. Yet, if the tax is enacted as planned, removing pretax plans outright may not be necessary, since they won’t lead to a penalty if the tax isn’t triggered by exceeding the threshold. In fact, according to the Kaiser Family Foundation, the average premiums in 2015 were $6,251 for individual coverage and $17,545 for family coverage, which are well below the threshold for the Cadillac tax. Since the regulations may change and the results are still unknown, staying the course, while also staying informed, will be important for brokers and their clients in the years ahead.
Which waves give businesses a boost?
Private exchanges — online marketplaces where people and businesses can shop for, compare and buy health insurance — existed prior to the Affordable Care Act, but they’ve received more attention in the years since the law has taken effect. According to the Aflac Healthcare 2025 survey, 86 percent of employees said they were happy with the decisions they made regarding health care coverage when they used a public or private exchange,and 16 percent of employers project that they’ll move their employee health insurance benefits to a private exchange in 2016 — up from 6 percent in 2014 and 2015.
By combining online enrollment and personalization, private exchanges allow health insurance consumers to research and choose benefits based on their unique situations, with support tools to help them make better benefits decisions.
With a variety of options to compare and choose from, combined with increased engagement opportunities in the benefits decision-making process, it is no wonder private exchanges have grown in popularity. Even with the consumer independence that typically accompanies moving benefits to a private exchange, brokers will still play a vital role in the enrollment and education process. Online enrollment coupled with personal consultation can help ensure that employees are selecting the right benefits to suit their individual needs, opening an opportunity for brokers to further position themselves as advisers.
Helping employers sail into calmer seas
The evolution of health care may create some turbulent waters. However, by balancing a benefits strategy that includes personal guidance, information on changing health care legislation and resources to empower employees’ benefits decisions, brokers can help businesses maneuver through the waves of change and into the future’s bright, not-so-distant horizon.