Segal reports surprising findings on multiemployer plan changes since passage of ACA

A study of nearly 300 multiemployer health plans shows that most plan sponsors have not made changes to their plans in anticipation of 2018’s upcoming 40 percent excise tax on high-cost health plans (the “Cadillac Tax”). The study also shows that 60 percent of the 300 plans have actuarial levels that are the equivalent of gold plans sold through the federal Marketplace and state Exchanges. That’s good news for plan participants, since gold plans pay approximately 80 percent of eligible benefits.

The study, by Segal Consulting, revealed that 34 percent of the multiemployer plans matched platinum plans in the Marketplace and Exchanges, which means that they pay benefits at a 90 percent level. The number of grandfathered plans was fairly evenly split, with 54 percent of plans retaining grandfather status so far, as opposed to 46 percent with non-grandfathered status. Grandfathered plans do not have to comply with some of the requirements of the Patient Protection and Affordable Care Act (ACA).

What plan sponsors are not doing so far. Segal reports that 77 percent of plan sponsors have still not considered making changes to avoid the upcoming Cadillac Tax in 2018. This percentage included both plans that had and had not done testing to see if they might exceed the excise tax threshold. Segal also found that 93 percent have neither implemented nor considered the following:

• including any reference-based pricing, such as setting a maximum reimbursement for a medical procedure or test based on an external reference such as median provider pricing;

• making plan design changes so that they can use a high-deductible health plan to be eligible to offer health savings accounts (HSAs); and

• establishing on-site clinics.

Furthermore, Segal says, 80 percent have neither implemented nor considered increasing financial incentives tied to wellness, such as surcharges or bonuses.

What plan sponsors are doing. On a more positive note, a majority of plan trustees are or are considering soliciting competitive bids for carriers and/or vendors (55 percent), and are or are considering implementing more intensive pharmacy-management programs (57 percent). Forty-five percent are or are considering increasing copayments for services, and 40 percent are or are considering increasing deductibles.

Spousal and retiree coverage. Only 11 percent of the multiemployer plans studied had changed coverage for spouses and the same percentage did not maintain retiree coverage. Of the plans that changed spousal coverage, most either did not maintain coverage for spouses covered under another plan (26 percent), had increased an existing charge for spousal coverage (18 percent) or had begun, for the first time, to charge for spousal coverage (12 percent). Of the plans that did not maintain retiree coverage, only one percent made that change for pre-Medicare-eligible retirees only.

The plans in the Segal study covered more than 1.2 million participants, including 1,016,195 active participants and 200,474 pre-Medicare-eligible and Medicare-eligible retirees. A majority of the plans covered the construction industry (64 percent), 12 percent covered the transportation industry, and 8 percent covered the retail trade and food industries.

SOURCE: Study of Multiemployer Plans – Current Affordable Care Act Issues, Segal Consulting, Summer 2015

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