HRM textbook

CHAPTER 13 BENEFITS AND SERVICES 435
to offer health insurance or pay a shared responsibility payment if the government
has to subsidize an employee s health care.
Employers in one recent survey by the consulting firm Mercer expected this act
to raise their health care expenses by from 2% to 5% in 2011. 49 As the act phases in
over the next few years (assuming Congress makes no changes), the excise tax on
high-cost plans was the employers main cost concern. Other cost-raisers, the
employers told Mercer, include the expanded coverage for older children, the ban on
lifetime benefit dollar limits, the requirement that employers auto-enroll new hires
into a health plan, and the rule that employers must offer coverage to employees
including those working less than 30 hours per week (many of whom now have no
health benefits). 50
COBRA COBRA the Consolidated Omnibus Budget Reconciliation Act
requires most private employers to continue to make health benefits available to separated
employees and their families for a time, generally 18 months after separation. 51
The former employee must pay for the coverage.
Employers ignore COBRAs regulations at their peril. Most importantly, you don t
want separated employees to leave and be injured, and then claim you never told
them they could have continued their insurance coverage. Therefore, when a new
employee first becomes eligible for your company s insurance plan, the person must
receive (and acknowledge receiving) an explanation of his or her COBRA rights. And,
all employees separated from the company should sign a form acknowledging that
they received and understand those rights. Figure 13-4 provides a COBRA checklist.
OTHER LAWS Other federal laws are pertinent. For example, among other
things, the Employee Retirement Income Security Act of 1974 (ERISA) sets minimum
standards for most voluntarily established pension and health plans in
private industry. 52 The Newborn Mother s Protection Act of 1996 prohibits employers
health plans from using incentives to encourage employees to leave the hospital
after childbirth after less than the legislatively determined minimum stay. Employers
who provide health care services must follow the privacy rules of the Health
Insurance Portability and Accountability Act of 1996 (HIPAA). 53 Employers must
provide the same health care benefits to employees over the age of 65 that they
do to younger workers, even though the older workers are eligible for federal
Medicare health insurance. Under the Americans with Disabilities Act, the plan
generally shouldn t make distinctions based on disability. And, as explained earlier,
the Pregnancy Discrimination Act requires employers to treat women affected
by pregnancy, childbirth, or related medical conditions the same as any other
employees not able to work, with respect to all benefits. Under the Genetic Information
Nondiscrimination Act of 2008 (GINA), employers need to be vigilant
about even apparently innocent situations. For example, if a health plan administrator
learns that a member s mother passed away from breast cancer and makes a
note to send a card, making the note and sending the card could conceivably
be held as violations of the act. 54
Trends in Employer Health Care Cost Control
Employers are endeavoring to rein in health care costs. Many retain cost-containment
specialists to help reduce such costs. And most negotiate more aggressively with
their health care insurance providers. 55 Most cost-control efforts necessarily start
by instituting methods for measuring and tracking health care costs. 56
health maintenance organization (HMO)
A prepaid health care system that generally
provides routine round-the-clock medical
services as well as preventive medicine in a
clinic-type arrangement for employees, who
pay a nominal fee in addition to the fixed
annual fee the employer pays.
preferred provider organizations (PPOs)
Groups of health care providers that contract
with employers, insurance companies, or
third-party payers to provide medical care
services at a reduced fee.