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Contraceptives versus religious objections

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The U.S. Supreme Court, which already has resolved three major controversies involving the health care reform law, will take up another one in 2016: coverage of prescription contraceptives by religious nonprofits.

The high court agreed in November to hear a challenge to an Affordable Care Act rule that requires religious nonprofit employers to offer employees cost-free prescription contraceptives or, under an accommodation finalized in July, pass the obligation to their health insurers or third-party administrators.

The plaintiffs are primarily Christian colleges and charities, which argue the requirement and the accommodation violate their rights under the U.S. Religious Freedom Restoration Act by forcing them to provide contraceptives they believe are immoral.

The Supreme Court decision “will be of great importance to a select number of employers,” said Barbara McGeoch, a principal at Mercer L.L.C. in Washington.

The U.S. Department of Health and Human Services rule followed a 2014 high court decision that struck down earlier rules requiring such organizations to provide contraceptive coverage directly.

ACA changes

Lawmakers are expected to continue to press for changes to ACA, with much of the focus on repealing a 40% excise tax on that portion of group health premiums that exceeds $10,200 for single coverage and $27,500 for family coverage. Congress voted last week to delay the tax until 2020, potentially setting the stage for a complete repeal.

Controlling costs

Not all benefit issues will be in the hands of lawmakers and the courts in 2016. Employers will continue experimenting with ways to manage escalating group health plan costs.

The costs are significant. The Centers for Medicare and Medicaid Services said U.S. health care spending topped $3 trillion in 2014. In November, Mercer said 2015 group health plan costs increased 3.8% to an average of $11,635 per employee.

That has prompted more employers to offer high-deductible health plans while controlling pharmacy programs with prior authorization programs.

“High-deductible plans tend to lower claim costs so that you either avoid the (Cadillac) tax or push out the potential tax liability for several years,” said Ed Kaplan, New York-based national health practice leader for The Segal Group Inc.

Wellness

Wellness was on the mind of the U.S. Equal Employment Opportunity Commission in its October proposal that would allow employers to offer rewards or penalties worth up to 30% of the group health plan cost for employees and covered spouses participating in voluntary wellness programs that collect their health status information.

Financial incentives linked to requests for employees' and dependents' genetic information currently are prohibited under the U.S. Genetic Information Nondiscrimination Act.

Specialty drugs

The cost of specialty drugs has soared in recent years.

In 2014, the most recent year available, specialty drug spending increased 30.9% to $311.11 per plan member, fueling the highest annual increase — 13.1% — in prescription drug spending since 2003, according to a survey by pharmacy benefit manager Express Scripts Holding Co. Specialty drugs accounted for just 1% of prescriptions but 31.8% of spending.

A National Business Group on Health survey found that 32% of employers plan to implement site-of-care management strategies in 2016, up from 18% in 2015, in directing employees to the lowest-cost place to fill and administer specialty drugs.

Consolidation

If approved by federal and state regulators, two multibillion-dollar mergers in the health insurance sector will shrink the largest national health insurers from five to three.

The mergers of Aetna Inc. and Humana Inc., and Anthem Inc. and Cigna Corp., are expected to close in the second half of 2016 if they secure approval from the U.S. Justice Department and state regulators.

“That has me worried, because at the end of the day we're going to have much less choice and lose leverage when negotiating rates,” said Bruce Elliott, compensation and benefits manager at the Society for Human Resource Management in Alexandria, Virginia.

New players

While health insurers want to merge, health care providers are looking to expand their efforts in 2016 to become health insurers.

“We believe that (provider-sponsored health plans) will continue to proliferate” in 2016, Standard & Poor's Corp. said in a recent report.

Pension de-risking

Hundreds of employers, including such well-known companies as Bristol-Myers Squibb Co., Ford Motor Co. and General Motors Co., already have “de-risked” their pension plans by offering to convert participants' monthly annuity to a cash lump sum or shifted promised benefits to insurers by buying group annuities, a trend expected to continue in 2016.

“There is a continuing corporate desire to get pension liabilities off their balance sheets,” said Mike Archer, a senior retirement consultant at Towers Watson & Co. in Philadelphia.

Multiemployer plans

More multiemployer pension plans are expected to tap a federal law that allows financially ailing plans to cut participants' benefits to avoid insolvency.

One of the nation's biggest and most underfunded multiemployer pension plans — the Central States, Southeast and Southwest Areas Pension Plan — will find out in May whether the U.S. Treasury Department will approve its proposal to cut benefits.

New pension designs

2016 also could see a new multiemployer pension plan design.

Under a design proposed by a panel of the National Coordinating Committee for Multiemployer Plans and being reviewed by lawmakers, plan benefits would have to be funded at 120%.

If funding slipped below that, benefits could be cut and/or employer contributions boosted.

In turn, a provision in a 1980 law that requires employers withdrawing from underfunded plans to be pay a share of unfunded liabilities would not apply. That has discouraged new employers from joining underfunded plans.