Big employers faced with incorporating the first round of health-care changes next month are grappling with how to comply with the long list of new rules.
Many companies are hiring consultants to help sort though the mountain of new mandates, which include extending dependent coverage to children up to age 26, and may eventually result in covering more employees. Some are also considering changes to their plans—including pushing costs to workers.
There is also some concern about how to digest the sheer volume of paperwork.
"There's administrative burden just to try and understand the 2,400 pages of the document," says Jenn Mann, vice president of human resources at software maker SAS Institute Inc.
As a result of the reform, SAS is doubling its legal and consultant expenses for 2011, says Ms. Mann. She declined to provide a dollar amount, and SAS wouldn't say what it currently spends on health-care overall.
SAS is also taking steps now to prepare for changes that take effect in future years. In 2018, a tax kicks in on employers with plans whose costs exceed certain levels. If SAS doesn't adjust its health plans, it estimates the tax will cost it approximately $20 million a year, says Ms. Mann.
To help get under the threshold level, in January SAS is eliminating its higher-cost indemnity plan and is also doubling co-pays to $20 from $10, she says. The company may still have to shift more costs to employees to avoid the tax, she says.
The U.S. Department of Health and Human Services says the health-care act "lowers costs for American businesses. The law provides small business tax credits, reimburses employers from some of their highest early retiree costs and cuts the hidden tax they often pay to provide care for the uninsured."
A survey conducted by Ernst & Young in August and September of 381 executives found that 31% are most concerned about the cost of compliance with the law, while 16% were most concerned about their overall readiness to comply with the law.
Borders Group Inc. has increased health-care-related consulting by around 20% to help it understand the law, says Rosalind Thompson, senior vice president of human resources.
Borders' 16,500 part-time employees in the U.S. are offered health coverage through a type of plan known as a "mini-med," which offers limited coverage.
Such plans may be more likely to run afoul of the law's requirements that insurers spend a high portion of premiums on medical care rather than administrative expenses. Those plans won a reprieve in November that loosened the requirements for 2011, but Borders says it's still waiting for guidance on how the rules will apply afterwards.
Ms. Thompson says Borders is also figuring out how to respond to the difference between how the law defines full-time and how Borders does. Borders considers employees who work 32 hours per week full-time, but under the new federal health law, employees who work 30 or more hours would be considered full-time.
Under that definition, Borders would have to cover more employees on its more expensive health-care plan.
"We'll have to do something different with part-time employees ... but until guidelines are fleshed out we don't know what," she says. The company says it's unsure whether it will reduce some employees' hours.
Borders is a member of the National Retail Federation and other groups that lobby on the company's behalf, and hopes those efforts will yield some concessions, Ms. Thompson says, though she wouldn't elaborate.
Neil Trautwein, vice president of the National Retail Federation, says the group has "a lot of concerns about the penalty mandates" and opposes "changing the definition of a full-time employee."
Furniture manufacturer Leggett & Platt Inc. is considering shifting costs to employees as it expects to have to bring more employees and dependents onto its plan.
John Moore, vice president of human resources, says that complying with the first round of changes next year will raise health-care costs by 2% for the company.
For instance, the Carthage, Mo., based company next year expects to cover more dependents after having to extend coverage to children up to 26 years of age, says Mr. Moore.
In 2014, the bill requires most people to have health insurance. Mr. Moore says he worries that will cause many of Leggett's employees who have opted out of the company's health coverage to sign up, raising Leggett's costs. Thirteen percent of Leggett's eligible employees "opt out" or elect not to have health coverage; many are young or dropped out of the plan to save money.
Mr. Moore says the company may consider increasing employee co-pays or implementing high-deductible plans in order to compensate.
Ryder System Inc. has increased its use of outside consultants by as much as 20% since March to help guide its response to the bill, says Gregory Greene, executive vice president and chief administrative officer of the truck rental company.
Until recently, the Miami-based company covered children until the age of 19 and full-time students up to 23 years of age, says Mr. Greene. Next year, it will have to cover dependents up to age 26 and remove a lifetime limit on claims.
Ryder doesn't expect big additional costs from those changes, but worries about future changes as regulators continue to flesh out some aspects of the law.
"The most concerning part is not knowing," says Mr. Greene.
From The Wall Street Journal 
by Dana Mattioli
by Dana Mattioli Reviewed / Posted by: Scott W. Yates, MD, MBA, MS, FACP
