Firms Feel Pain From Health Law

Dana Mattioli
Wall Street Journal

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.

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