Meeting The ACA Employer Mandate
There has been a lot of press coverage about attempts to delay and defund various parts of the Affordable Care Act (ACA). But much of the ACA is already in effect, and it's unlikely that the employer mandate will be delayed indefinitely. At some point, large employers will likely be penalized if they don't offer full-time employees affordable coverage, and at least one full-time employee will go to the Health Insurance Marketplace, or “Exchange” and receive a tax credit or premium subsidy.
So, now that the “Exchange” notices are out, what must — or should —employers do by Jan. 1, 2015, when the employer mandate takes effect? Here are three pieces of advice:
• Count Employees and Track Hours
To know whether employer penalties apply, and how much they might be, know the status of your workforce: full-time, part-time, temporary, seasonal, leased. The best guess right now is that payroll size and employee status will be calculated — at least in part — on some “lookback” period. Therefore, employers should track scheduled and actual hours, beginning Jan. 1, 2014.
• Gather Information
To decide how to deal with the ACA, know certain basic facts. Is your company “large” (and subject to penalties) or “small” (and exempt)? Are any other companies sufficiently related to the employer that would require treatment as a single employer? Are any employees likely to be eligible for tax credits or subsidies based on their declared earnings? If the employer offers coverage now, is it “affordable”?
Once this information is assembled, use it to determine potential penalty exposure, potential tax credit availability, and the true “cost” of providing health insurance (net of tax benefits).
• Evaluate Options and Develop a Plan
Often, commentators will describe employers' options as pay or play, meaning that you drop coverage and pay penalties, or stick with the status quo. Many employers can't realistically drop coverage, however, because it hurts them when they compete for qualified candidates. Luckily, employers' options are not that limited. For instance:
• Employers in certain industries —such as retail and restaurant — may be able to restructure their workforces so that most workers are not full time (i.e., at least 30 hours per week). Since penalties only apply with regard to full-time employees, restructuring can reduce or avoid penalties.
• Employers can consider using leased employees for some or all of their work. Leased employees are not considered employees within the mandate, so using them transfers the obligation of providing insurance — and liability for the penalty — to the leasing company.
• Finally, the employer's obligation is to offer affordable coverage, not to ensure people enroll in it. Employers can consider adding a low-cost, high-deductible plan (such as the “bronze” plan on their state exchange) to their health insurance offerings for 2015, even if the employer believes employees won't want to purchase that option. If an affordable option is available, that prevents employees from being eligible for the exchange, and, as a result, eliminates liability for penalties.
While we may want the employer mandate repealed, an employer's best bet for 2014 is to hope for the best, but prepare for the worst.n
Kimberly I. McCarthy is a partner at Partridge Snow & Hahn LLP. Contact her at kim@psh.com.
Read more
White House Calls Time Out On Key Health Reform Provision
Panelists To Businesses: Start Preparing For ACA
State Prepping For Huge Shifts In Subsidized Insurance Populations
WBJ Web Partners
Most Recent
Most Recent
0 Comments