As expected, this year’s Workplace Benefits Mania conference in Las Vegas was packed with excellent content and valuable collaboration in a fantastic venue. As I reflected on my top takeaways during my return flight, it hit me: We have entered a new chapter in the post-Affordable Care Act landscape.
When my team launched ContinuousHealth in 2007 (acquired by Hodges-Mace in 2014), we conducted significant research into the laws, regulatory guidance and available products and services in the employer benefits space. We used this knowledge to develop a unique product to address healthcare inflation.
As we brought this product to market, we were often surprised to observe brokers pursuing strategies that seemed to be, at best, out of compliance with the existing regulations and, at worst, bordering on malpractice.
Upon reflection, we graciously concluded that the business of providing advice in employee benefits is a very difficult business. It involves significant cost inflation amidst a complex set of regulations involving the Departments of Treasury, Labor and Health and Human Services. Then you must factor in the added complexity created by state-based Departments of Insurance where they have jurisdiction.
One of my takeaways from this year's Mania conference is the alarming lack of clarity around several important aspects of regulations affecting the employer provided benefits in the post-ACA landscape. This point was especially highlighted during the Q & A portion of my keynote panel with Manuel Mendoza on Compliance Updates: Healthcare Inflation, the ACA and the Labor Market.
Compliance
For the past several years we have been observing a now predictable cycle of action and reaction as the ACA has impacted benefits strategies. The ACA has undoubtedly been the biggest catalyst to hit the benefits market in the last 20 years, the greatest single set of new benefits compliance legislation in our lifetimes. Because of the significant focus on the ACA, everyone was extremely focused on the resulting compliance regulations and, in essence, the novelty encouraged increased focus, which resulted in the reduction / elimination of many non-compliant practices.
Addressing the realities of today’s employee benefit market, speakers at the conference shared tips for advisers to improve sales and better leverage client relationships.
Creativity
This set in motion a repeatable cycle of creativity on the part of brokers/consultants and insurance companies to come up with approaches that were compliant with the letter of the regulations (if not the spirit) in order to help employers avoid cost increases. Early adopters of these new creative solutions have such a significant cost exposure, they do not hesitate to incorporate these solutions into their benefits strategies. And like all things in benefits, everyone is continuously on the lookout for the “shiny new silver bullet” to present to their clients (and differentiate their practice). As a result, this creativity becomes quickly widespread through word of mouth and aggressive marketing.
Clarification
The cycle continues with the release of clarification by the regulators — often specifically addressing the observed creativity. While this clarification has typically come with some form of grandfathered treatment for the early adopters, often it does not, punishing the employers and brokers who were first movers. If not financially, these first movers are having to re-work their benefit approaches based upon the clarification.
The last point in my post-ACA cycle is the most troubling. Successful brokers/consultants responsible for advising significant numbers of employers are having a difficult time keeping up with the steady stream of clarifications. As was the case several times in the Q & A session of our presentation, confusion has been the result. My greatest fear is that this cycle could lead to a return to the pre-ACA world in which we were surprised to observe brokers pursuing strategies that seemed to be, at best, out of compliance and, at worst, bordering on malpractice.
Confusion
The entire benefits industry was on hyper focus after the release of the ACA and the initial set of milestones. Everyone became students of the underlying laws and regulations. But as time has passed and the cycle of compliance, creativity and clarification has repeated itself over and over, we all need to remember that the game has changed forever. In order to avoid confusion, all should adopt a structured way to interpret the continuously evolving landscape. At Hodges-Mace, we use a proprietary framework to classify the onslaught of information and communicate changes to our broker partners and clients.
The gracious conclusion? The business of providing advice in employee benefits in the post-ACA era is a very tough business. Just as was the case prior to the passage of the ACA, it involves significant cost inflation amidst a complex set of regulations involving the Departments of the Treasury, Labor and Health and Human Services. Not to mention the added complexity created by state-based Departments of Insurance where they have jurisdiction. Because of the compliance, creativity, clarification cycle, the ACA has done nothing to reduce this confusion. Unfortunately, because of the new penalties, additional reporting and increased audit resources created by the ACA, the exposure of brokers and employers has never been greater.
Readers will take note that I specifically avoided the additional element of political discourse surrounding the ACA and its contribution to this confusion. I hope it goes without saying that our collective jobs are hard enough without adding this to the fray. The best in the benefits business have always been lifelong learners. I anticipate the return on investment for this behavior will continue to be a major differentiator in the post-ACA era.
