The Affordable Care Act has many business owners questioning their options and responsibilities. In a webinar presented by KPA on Affordable Care Act compliance, vice president of HR Management Products Kathryn Carlson offered some vital information for how to remain compliant.
According to the Affordable Care Act, a full-time employee works an average of 30 hours or more per pay period over a 120-day period. Effective October 1, 2013 individuals and small business (50 or fewer employees) can now purchase healthcare insurance through state or federal healthcare exchanges. Employers with 50 or more full-time employees plus full-time equivalent employees must offer affordable, minimum essential coverage of minimum value or potentially be subject to tax penalties. There will be a $3,000 penalty per employee for not providing minimal coverage or affordable coverage.
Open Enrollment in Healthcare Exchanges
If you are no longer offering benefits, or are a small employer not required to offer benefits, employees can enroll in Healthcare Exchanges. Employers are required to provide notice of the healthcare exchange to current employees and new hires. Open enrollment in Healthcare Exchanges was a struggle at first, with the website not being able to handle the amount of people choosing the option. Website glitches have since been repaired.
Annual Dollar Limits and Waiting Periods, Pre-Existing Condition Exclusions
For plan years beginning on or after January 1, 2014, employer group health plans may not impose annual dollar limits on essential health benefits, waiting periods of longer than 90 days, or pre-existing condition exclusions. Your insurance provider should make sure you are compliant with these regulations. Review your plan to remove or update your “probationary period”.
For plan years beginning on or after January 1, 2014, permitted wellness incentives increase from 20% of cost of coverage to 30% (up to 50% if the wellness program is established for the purpose of tobacco use prevention or reduction). You can reduce employer healthcare costs by improving employee engagement and accountability for healthcare costs. A healthier workforce will mean less usage of your plan.
“Automatic” Enrollment & Nondiscrimination Rule
Employers with 200+ full-time employees must automatically enroll new employees in the employer’s group health plan. You can send an electronic notice to employees regarding automatic enrollment, but it has not been mandated.
Increased Small Business Tax Credits
If you are going to provided health insurance as a smaller employer, it is a pretty significant expense. Up to 50% of the cost of providing health insurance may be available as a tax credit. A business must have 25 or fewer employees in order to be eligible for the tax credit. To be eligible for the credit, a small employer must pay premiums on behalf of employees enrolled in a qualified health plan offered through a Small Business Health Options Program (SHOP) Marketplace. The credit will be available to eligible employers for two consecutive taxable years.
What Happens Now?
With the Affordable Care Act, 15% of large employer and 20% of small employers now plan to reduce employee hours so that fewer employees qualify for insurance. Employers who offer benefits will have the recruiting and retention advantage.
Alternatives to Standard Healthcare Insurance
There are plenty of options beyond the “traditional” benefit programs. You may want to consider Consumer-Driven Health Care (CDHC), a health insurance plan that allows members to use Health Savings Accounts (HSAs), or similar medical payment products to pay routine health care expenses directly, while a High-Deductible Health Plan (HDHP) protects them from catastrophic medical expenses.
You could also self-insure by paying for your employees health care (including buying “stop loss” insurance to protect the business from very high costs). Self-insured plans do not have to offer the “essential health benefits” that each state has defined, they are exempt from the annual insurance fee that insured small groups must pay, and they will not contribute to (or receive) state-based risk adjustments for insured small groups and individuals.
As with any adjustments to your business, communication of changes and how they impact employees is vital. Follow these tips for clear and careful communication.
Plan - Before you get started, define objectives, identify key stakeholders, and create a strategy and plan of action.
Tell the Truth - Employees see through and resent attempts at hiding benefit changes that can be perceived negatively.
Be Consistent - Determine key messages at the beginning and communicate them consistently.
Educate - Supervisors and managers have influence over employees and can be advocates or barriers depending on how you treat them.
Multiply - Reinforce key messages multiple times and across a variety of media in a coordinated way to avoid overwhelming the intended audience.
Get Control in Three Steps
As you strive to remain Affordable Care Act compliant, gain control of your business expenses with these three steps:
1. Consider alternatives to your current plan?
2. What options do have you to drive down cost?
3. Be ready for changes to the Affordable Care Act
Kathryn Carlson is the Vice President for KPA's HR Management products. Kathryn has over 25 years of human resources management experience and is a certified HR professional. For the past 13 years Kathryn has focused on developing HR software and programs to improve efficiency, reduce risk, and ensure compliance for companies ranging from small businesses to international corporations.