The Affordable Care Act (Obamacare) – What Employers Need to know

As if business owners didn’t have enough to worry about, they must now add Affordable Care Act compliance to their growing list of concerns. Here’s a rundown on the various requirements which employers are responsible.

Healthcare Reform Checklist (Key Provisions)

  • A Summary of Benefit Coverage must be distributed to employees within a timely fashion, as mandated by the Affordable Care Act, for open enrollment, initial enrollment, special enrollment and upon request. This requirement applies to businesses of all sizes.
  • Employers must notify employees if plan qualifies for Grandfathered status. To maintain status as a grandfathered health plan, it must include a statement, in any plan materials provided to a participant or beneficiary, describing the benefits provided under the plan or health insurance coverage. (Grandfathered status is significant because those plans do not have to comply with certain requirements, including costly plan requirements, under Health Care Reform. However, a plan may lose its “grandfathered” status if it makes certain significant changes.) Again, this requirement applies to businesses of all sizes.
  • All businesses must provide Exchange Notices to their employees.
  • Medical Loss Ration Rebates – Did you get a medical loss ration refund? Do you know how to distribute the money to employees? Ex-employees? What if the amount of a premium rebate is de minimis? Medical loss ration variables include small or large group, fully-insured vs. self-funded, and pre- or post-tax.
  • Small Business Tax Credit – Don’t get too excited about this one. The credit is minimal and there are whispers of IRS audit targeting companies claiming the credit. However, for a low skilled, lower wage work force, it could be a win. Eligible employers are those with fewer than 25 full-time equivalent employees (FTEs) for the taxable year.
  • 90 Day Waiting Period Limitation applies to all employers.
  • Employer Share Responsibility (“Play or Pay”) applies to groups with 50 or more FTEs.

Visit Healtcare.gov to view model notices, as well as other resources for employers.

Financial Impact

According to a study cited by America’s Health Insurance Plans (AHIP), it is estimated that in 2014, restrictions on age rating could result in premium increases up to 42 percent for people aged 21 to 29 and up to 31 percent for people aged 30 to 39. In addition to age rating restrictions, Affordable Care Act also imposes new taxes, fees, and required benefits that could result in further premium increases.

In most states, Individual Medical premiums will soar for the under-50 crowd, including the vast majority who maintained continuous coverage and stayed in good health. Some of those people simply cannot afford the requirements of Affordable Care Act, and in 2014 will drop their health insurance. Expect to see insurers significantly limiting the choices of doctors and hospitals available to consumers in an attempt to control costs.

Solution

What should employers do? Be proactive. Several options exist ranging from accepting the plan modifications and absorbing the price increase to dropping coverage altogether, or, evaluating Professional Employer Group (PEO) options, etc. Working with a highly qualified broker or human resource consultant is recommended for businesses who are newly venturing into Affordable Care Act  territory.

Either you or your consultant (preferably both) should have access to a human resource library, an online portal with regular, if not daily, updates on healthcare reform as well as other benefit and human resource topics. New regulations seem to come out daily, staying atop of the issues could save your business thousands of dollars in potential fines. What you don’t know could cost you dearly.

About the Author

Michael J Schunk is a Certified Employee Benefit Specialist with over 25 years of experience. His work has been recognized nationally by “Best Practices in Compensation & Benefits” in the areas of communication, wellness and disease management. He owns Employee Benefit Advisors, www.ebafl.com.

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