As political pundits sound off on various cable news networks and business owners try to wrap their heads around what Obamacare will mean to them; credit unions are also trying to figure out what this healthcare mandate will bring not only to employee benefits but how they do business going forward.
Elizabeth Kindlon, CEO at Community Resource Federal Credit Union ($66 million Latham, NY) bluntly expressed her concerns about how the new plan will impact the credit union.
“I see no positive benefits from this legislation,” she says. “We provide an excellent health insurance plan with minimal cost to our employees. If this legislation is allowed to remain, I foresee costs going up to the employees and their options limited.”
Kindlon says that she and her team currently reviews the plans offered annually and makes the best choice for employees. “Under Obamacare, the choice of available plans will be greatly limited and we lose the control we now have to research and choose from numerous options. And, if we change our current plan, we lose the ‘grandfathered’ status. [Flexible Spending Accounts] are already being limited, which in effect is a tax increase. If there is the anticipated shortage of doctors, more time could be lost by employees due to illness and disease because of delayed treatment. If health insurance becomes unaffordable for the credit union, we may no longer be able to offer it.”
“Why is there a requirement to include the value of coverage on W-2s,” she asks. “This can only mean that benefits will eventually be taxed.”
While expressing numerous concerns, Ruth Jenkins, President/CEO at Heritage Federal Credit Union ($421 million, Newburgh, IN) sees some positive aspects because it could provide more comprehensive coverage such as prohibiting lifetime limits on the dollar value of benefits, raising the age for dependents, and mandating specific preventive care services with no cost sharing on the employees part.
However, like Kindlon she sees a downside to the program as well. “A negative impact was the exclusion of over-the-counter drug purchases from being reimbursed through a Flexible Spending Account,” Jenkins says. “The FSA cannot provide non-taxable reimbursements for over the counter drugs unless they are prescribed by a doctor. Previous to the ACT, they were reimbursable without a prescription.”
Jenkins says that two years ago, Heritage FCU introduced a dual Health Insurance program to include a high deductible plan to coincide with the Health Savings Account (HSA) it offers. “Offering our employees more options allows them to make the insurance choice that best meets their personal and family healthcare needs.”
CEOs Discuss The “Real Life” Impact Obamacare Could Impose
With the tidal wave of regulations and mandates currently being placed on financial institutions, CEOs are concerned about the additional manpower and expense possibly derived from the implementation of this program.
“The mandate and the legislation in general are full of rules and regulations that will require a great deal more work and record keeping on our part,” Kindlon says. “We expect costs to increase, creating pressures on our budget. More time will needed to be spent understanding the rules and explaining them to staff.”
While Kindlon says that it’s too early to determine how or if Obamacare will have any impact on how credit unions do business with members she says, “What I do know is that there is so much hidden and confusing in this legislation, we will only realize the impact when a provision is implemented or a particular situation arises,” she says. “Much of the information that is coming out is not telling the whole story. I’m fearful for the future, especially for our older employees.”
Jenkins agrees that the reality of the new mandate is that it will require more work for applicable staff members who must generate new required reports and provide new disclosures to their staff members. “Staying compliant with all of the requirements will cause additional work and expense, but not to a significant degree.”
Heritage FCU has taken early measures before Obamacare goes into effect, Jenkins says. “In a proactive move to prepare for and offset rising costs, Heritage FCU just purchased a Company Owned Life Insurance investment (COLI),” she explains. “The investment is permissible for credit unions, offers a slightly higher yield than current investment alternatives as long as the earnings are used for, and do not exceed, benefit expense for employees.”
Jenkins says that in the area of complying with the Patient Protection and Affordable Care Act, credit unions will have to make changes to their current plan if the mandated changes are not already included in their particular coverage for employees. “It will be important to make sure that credit unions are partnering with qualified brokers/agents to make sure they are including all new requirements of the Act as each one becomes effective. With the federal review of health insurance premium rate increases, it is possible that credit unions could be better protected from ‘unreasonable’ rate increases.”
If you have questions about how Obamacare could impact your credit union, contact your CEO or credit union’s human resource department.