By Gary Kushner
Dec. 11, 2013
Employers were on track to implement the majority of the new Affordable Care Act requirements in the latter part of 2013 in preparation for its 2014 launch.
The new state/federal/federally facilitated health marketplaces were set to enroll both individuals and, in their Small Business Health Options Program entryway, small employers of either 50 or 100 and fewer employees beginning on Oct. 1. Employer strategies and compliance plans were being formulated and tested, and implementation plans were put in place.
Employers also were reviewing all of the new reporting requirements to coordinate the process of when employees might individually go to the marketplace and possibly qualify for premium assistance. Small employers generally hadn’t even begun their plans for addressing any strategic changes or compliance issues.
And then IRS Notice 2013-45 was released July 2 (tinyurl.com/IRSnotice2013-45), postponing both the employer-shared responsibility and reporting provisions of the ACA to plan years beginning in 2015 (but no shenanigans in changing plan years to start in late 2013 or 2014 in order to further postpone the new requirements). In what is now probably the most well-documented failures of a website rollout of all time — never mind that significant health care reform was first proposed by President Theodore Roosevelt more than 100 years ago — some pundits and politicians railed that if healthcare.gov didn’t work to perfection in the first few days, then any health care reform should be dead.
Employers shouldn’t wait for 2018 to begin calculating whether the plans they offer would generate the new so-called “Cadillac” tax that year.
So, many employers (ironically, mostly small employers not subject to the new employer shared-responsibility provisions at all since they have fewer than 50 full-time equivalents) shelved their plans, breathed a sigh of relief and went on with the work of their organization.
But rather than ignore the future, employers should step back, examine their overarching human resources and total rewards strategies (of which health benefits is but one component) in alignment with how their organization competes, and realize that the ACA may be a once-in-a-lifetime opportunity to rethink how (and even whether) to offer health benefits to some or all of their employee base. Only then should employers formulate their compliance plans. And they now have one more year to hit that reset button.
What to Do Now
Every organization, large or small, should start by asking itself a few questions:
What are the implications of offering health benefits as a part of a total rewards strategy (or not) on our ability to recruit?
What are the implications of offering health benefits as a part of a total-rewards strategy (or not) on our ability to retain and engage critical talent?
If we don’t offer health benefits, what, if anything, do we offer instead? Our overarching total rewards strategy is to lead, match or lag the market. Do we make previously eligible employees whole? And at what cost?
Next, there are a number of qualitative analyses the organization needs to perform. First, if we’re going to maintain one or more health plans, are they grandfathered in or not? Basically there are only seven specific provisions in the ACA that only apply to nongrandfathered plans. Does compliance with any of those seven provisions cause the employer grief? If not, there may be no value (and significant costs) in maintaining grandfathered status for virtually no reason.
Do the health plans the organization offers meet all requirements to qualify as providing all essential health benefits? Do they provide at least 60 percent of actuarial value? Are the plans affordable, meaning they meet any one of the three new safe harbors?
Lastly, the employer should perform a number of quantitative analyses, including the potential for penalties beginning in 2015 for having full-time employees (those regularly scheduled to work 30 or more hours per week) purchase coverage at the marketplace, qualify for a premium tax subsidy and thus possibly generate an employer penalty.
Further, employers shouldn’t wait for 2018 to begin calculating whether the plans they offer would generate the new so-called “Cadillac” tax that year.
So get through open enrollment this year, take at least a week to close your eyes and get more than four hours of sleep each night, and begin the process of reviewing your organization’s strategic and compliance plans for the ACA come 2015.
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