The writing has been on the wall, and the forecast is clear: healthcare costs are projected to surge by as much as 8.5% in the upcoming year. For employers, especially amidst the new landscape created by the Consolidated Appropriations Act (CAA) of 2021, this anticipated increase isn’t just a statistical figure – it’s an urgent call to action.
Several factors are driving this surge, including inflation, increased demand for healthcare services, and technological advancements that often come with a hefty price tag. Add to this the financial aftermath of global events like the COVID-19 pandemic, and it's easy to see how the numbers start to stack up.
But beyond the macroeconomic indicators and industry trends, there’s a more pressing issue at hand for employers: the impact of these rising costs on group health plans.
Navigating Fiduciary Waters
The CAA wasn’t just a headline; it reshaped the responsibilities of employers offering group health plans. With its emphasis on price transparency, broker compensation disclosures, and enhanced mental health parity regulations, the act put employers squarely in the spotlight when it comes to ensuring plan compliance.
This new landscape isn’t just about ticking boxes and meeting regulatory requirements. It’s about the fiduciary obligations employers now hold. The onus is on companies to ensure their health plans are not only cost-effective but also in line with the CAA’s stringent guidelines. Missteps here aren’t just regulatory breaches – they could be costly financial pitfalls.
Why Vigilance is the Name of the Game
Here’s the deal: as CFOs and HR executives, you’re no longer just strategists in this conversation – you’re stewards. The anticipated rise in healthcare costs, coupled with the CAA’s provisions, means the margin for error is razor-thin.
Vigilance is about being proactive. It’s about dissecting the complexities of the CAA and understanding how its provisions intersect with the evolving cost dynamics. It’s about ensuring that as costs rise, your health plan doesn’t inadvertently cross regulatory boundaries.
But most importantly, it’s about making certain your company health plan is optimized for cost while ensuring employees have access to the healthcare they deserve.
In short, ensuring that the CAA’s transparency and reporting requirements are met and that the provided data is accurate are now employers’ fiduciary responsibility.
Rising healthcare costs are inevitable, but being caught off guard isn’t. As we stare down another year of higher costs and grapple with the CAA’s intricacies, the time for vigilance is now. It’s a challenging journey ahead, we know, but with a deep dive into the details and a proactive stance, it’s one that CFOs and HR executives can confidently navigate.
The Mahoney Group, based in Mesa, Ariz., is one of the largest independent insurance and employee benefits brokerages in the U.S. For more information, visit our website or call 877-440-3304.
This article is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.