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Employee Benefits in 2017

Change is coming. How will it affect you?

Employee Benefits Outlook for 2017

January 17, 2017

The election of Donald Trump has ensured that 2017 will be an eventful one in the area of employee benefits.

Even if massive changes to the Affordable Care Act and other health care regulations are kicked down the road a bit, it seems that the new administration wants to hold true to its promise to repeal Obamacare. The much harder task is replacing it, and the health care industry is sending up red flags to warn Republicans that sudden repeal without a carefully thought-out replacement could be extremely disruptive to insurers, providers, and employers.

Experts studying the tea leaves say it’s probable that most employers won’t see big changes in 2017, but warn that they will need to work closely with their brokers and carriers to stay informed and plan for changes in the future. It could take several years to phase in a new approach but it seems very likely that change is coming, and everyone is likely to be affected.

REPEAL AND REPLACE—WITH WHAT?

With both branches of Congress and the White House controlled by Republicans, the Trump Administration is well-positioned to make good on its promise to repeal the ACA. However, experts in the benefits world seem united in the opinion that changes will be phased in slowly, to give the business community time to adjust.

Two of the things most likely to change—the online marketplace (the ACA exchanges) and the individual mandate—are ACA components that most employers don’t deal with. The employer mandate—the part of the law that requires employers to provide health insurance benefits—is more likely to hang around in some form. Whatever form the changes end up taking, it’s important for businesses to continue to comply with the law and to plan on compliance for the foreseeable future.

It’s possible that ACA repeal and tax reform could be joined in some sort of package deal under the new Congress. Rep. Tom Price, the nominee for Secretary of Health and Human Services, has previously supported changing the employer tax exemption for health benefits. If there is a big tax overhaul, changes to the employer tax exemption could be part of the overall deal, so, for example, giving less of a tax break for providing insurance might be coupled with lower corporate taxes. Reducing the tax exemption would directly affect employers and enrollees, and likely make health insurance more expensive for both. It’s definitely an area to keep an eye on in 2017.

The ACA’s Cadillac tax, a tax on high-benefit health plans offered by some employers, is also likely to be scrapped. It was always politically unpopular and had been delayed by the Obama Administration.

WILL TRUMP PUSH FOR PAID MATERNAL LEAVE?

During the campaign, Donald Trump supported the concept of paid maternal leave, something that the United States does not mandate as a federal policy.

There could be bipartisan support for legislation in this area. Democrats have pushed for paid family leave in the past. The Trump proposal is more limited than some proposals, but still would be a major step for the U.S.

Or, if the Trump Administration decides not to move quickly on the issue, we could see continued efforts by local governments and/or big employers to expand benefits in this area. City and state governments in California, New Jersey, and Minnesota, among others, have passed both paternal leave and sick leave laws. This trend toward expanded benefits is likely to continue, and some believe the federal government may continue to leave it up to employers and the states to set policy in this area.

This, of course, can cause problems for employers with sites in multiple states, as they struggle to comply with different standards. It’s important to have good sources of information on these types of laws—which are changing all the time—and leading employee benefits brokers can be invaluable in keeping companies up to speed on this and other issues.

OTHER ITEMS TO WATCH IN 2017

One thing that will continue to plague employers, ACA repeal or not, is the high cost of health care. Expect to see continued innovation and refinement of plans as employers seek solutions to these rising costs.

Businesses will continue to switch to high-deductible HSA plans—especially as Washington is likely to be more friendly to the HSA model, since it is favored by Republican policy-makers. Regulations around HRAs and HSAs alike are likely to change to favor greater flexibility, so keeping up-to-date on those developments will be helpful.

Prescription drug costs, in particular specialty drugs, have come under increasing scrutiny in recent months. The dramatic rise in the cost of EpiPens is a story that caught a lot of attention in 2016, and employers and policymakers alike will continue to watch pharmacy benefit costs closely this year. Many employers are working with brokers on supplemental and voluntary benefit offerings, which can help customize benefits to best fit employees’ needs. Voluntary benefits, such as accident insurance and critical illness insurance, will appeal to many employees. And supplemental benefits, which can include telemedicine or patient advocacy services, are also growing in the industry. Telemedicine and onsite clinics will continue to be appealing to employers because they fit the needs of employees and reduce absenteeism.

Finally, technology will continue to offer new approaches and opportunities for employee benefits. Watch for more and more online benefit services to become available, especially for smart phones and other portable devices. Not all employees regularly use a computer, but the number of Americans using smart phones, iPads, or similar devices is quite high. Bringing services to platforms that people use will be a priority for many benefit providers.

GETTING HELP

The most reasonable forecast for 2017 is that there will be plenty of debate, controversy, and big decisions being made. Employers don’t need to get caught up in every detail, but they do need a trusted resource to tell them how the changes will impact their business. The best health and benefits agents and brokers can help guide businesses through the upcoming changes—after all, they were there for the ACA reforms. They will be there again for employers as a new administration lays out its vision for the future.


This document is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Marsh & McLennan Agency LLC shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting or legal matters are based solely on our experience as consultants and are not to be relied upon as actuarial, accounting, tax or legal advice, for which you should consult your own professional advisors. Any modeling analytics or projections are subject to inherent uncertainty and the analysis could be materially affective if any underlying assumptions, conditions, information or factors are inaccurate or incomplete or should change.