Employers plan for health care changes
But the changes already are raising questions and challenges for local employers.
“There’s a lot of details that still need to be worked out,” said Pat Whitmore, vice president of human resources at Hufcor in Janesville.
The Affordable Care Act requires plans and issuers that offer dependent coverage to make the coverage available until the adult child—married or unmarried—turns 26.
A Wisconsin law that went into effect Jan. 1 allows unmarried adult children to remain on their parents’ health insurance until age 27. The change, however, didn’t affect all area employers because companies with self-funded plans are exempt from the state law.
The federal law goes into effect as plans renew after Sept. 23.
Joe Pregont, president and CEO of Prent Corp. in Janesville, said the federal changes don’t fix some of the health care system’s biggest inefficiencies.
The Affordable Care Act is a good example of the problems with the law, he said.
Insurance is being extended to young people who, “at 26 years old, should not be dependent on their parents anyway,” he said. “Our costs are increased for no good reason without any corresponding savings or productivity gains, thus making us less competitive against foreign competition.”
Prent is a manufacturer of custom packaging for the medical, electronics and consumer industries.
Unrolling the changes
Because of the federal change, employees at Hufcor will see an earlier enrollment period—November instead of December, Whitmore said.
Hufcor, which makes operable wall systems, has about 250 employees in Janesville and a total of 500 in the U.S.
Employers are faced with many unknowns, including the number of dependents who could or will come onto their plans and how much they will cost.
National estimates show about 30.7 percent, or 8.8 million, young adults aged 19 to 25 had no health insurance in 2008, according to the Congressional Research Service. Another 6.2 percent, or 1.8 million, young adults in that age group had private non-group coverage.
Pregont, whose company provides coverage for 350 employees in Janesville, said he’s hoping to add as few dependents as possible.
“If (we add) one person, it makes us less competitive,” he said.
Employees at Hufcor have said they’re happy the coverage will be extended, Whitmore said.
“I think most comments we get are from employees who have kids remaining in college that are 25, 26 years old,” she said.
At Hufcor, insurance is offered to dependents until age 19 if they’re not in school or 23 if they are students.
For a 19-year-old Hufcor dependant not in school, for example, the new law extends coverage for seven more years, Whitmore points out.
Who pays for coverage of the dependents is another unknown, she said.
The U.S. Department of Health and Human Services says a mid-range estimate found average family premiums would increase by 1.24 percent next year while adding 1.2 million young adults to their parents’ plan. Premiums would increase another 1.6 percent in 2012 and 1.65 percent in 2013.
Employers have some flexibility in the federal law until 2014, when the rules will change, Whitmore said.
One decision leaders at Hufcor need to make, for example, is whether coverage should be extended to the adult children who have offers of insurance from their own jobs.
As Whitmore understands the law, employers after 2014 will have to cover dependents who have a job but want insurance through their parents.
“We have some control for the first couple years,” she said. “It’s one of the things we need to analyze.”