PPACA May Create Need for New Adviser Role

Health benefits costs will continue to increase despite the Patient Protection and Affordable Care Act (PPACA), and in some cases, because of it, according to Sheldon H. Smith, of counsel at Bryan Cave LLP in Denver.

The law will create new administration expenses, such as reporting and disclosure requirements, he told attendees at the American Society of Pension Professionals & Actuaries (ASPPA) Annual Conference in National Harbor, Maryland. In addition, the law eliminates lifetime and annual benefit limits and pre-existing condition exclusions, also driving up costs.

Will the financial impact be great enough for companies to consider reducing or eliminating retirement plan contributions, Smith queried, noting that health care benefit costs are double that of retirement benefit costs, according to data from the Bureau of Labor Statistics. Many employers are trying to control costs by shifting costs to employees. Will employees react by decreasing their salary deferrals into retirement plans?

Smith contended this creates an opportunity for a new kind of adviser he called a total benefits adviser. A total benefits adviser would help employers determine how to pay for benefits and continue to use retirement plans as attraction and retention tools, and help employees determine how to allocate dollars between benefits.

“We need to educate folks about how to manage money to both pay for health care and save for retirement,” he concluded.