On July 3 the IRS announced a one-year delay of the employer mandate provision of the Affordable Care Act. But that doesn’t mean you get to sit back and wait until next fall to figure out how you’re going to deal with the new health care law.
The mandate only applies to businesses with 50 or more full-time employees. But regardless of the size of your workforce, if your company makes $500,000 or more in annual revenue, you are still required, by October 1 this year, to distribute written notice to all employees informing them of the existence of new state health-insurance exchanges. The notice must include the following: the services offered by the exchanges; the employee’s potential eligibility to receive subsidized coverage on the exchange if employer-provided coverage is inadequate; and the fact that employees may lose any employer health-premium contributions if they opt to buy an individual policy instead. For more information on notice requirements -- plus model notices -- go the Department of Labor’s website.
If you have employees who you expect to seek individual coverage through the exchanges, they will still be able to get it -- and qualify for subsidies. Although employers won’t have to report the details of their health-insurance contributions until 2015, workers who go the exchanges to get coverage will have to fill out an application that includes questions about any benefits offered by their employer. Employers are asked to assist workers in completing these forms, but are not explicitly required to -- the federal exchanges will make random, spot checks to verify subsidy eligibility.
Notwithstanding assurances from the federal government, though, Mark Bailey, Sr., president of the Bailey Group, a benefits adviser to businesses in the St. Augustine, Florida, area, says, “We continue to be concerned that many of the state exchanges, including Florida’s, will not be operational as of October 1.” Bailey is advising clients with 50-plus employees who have already made benefit and contribution changes to be effective this January to stay the course -- and to use the delay in employer-mandate penalties to make sure that their plans meet affordability and minimum value requirements. Additionally, Bailey is urging clients with variable-hour workers to make sure they put in place effective tracking tools so that they don’t get dinged for improper counting of full-time-equivalent employees come 2015. “The delay also allows us additional time to view the future impact of different measurement periods [for determining eligibility],” he says.
Premium increases for fully insured group plans are increasing as much as 20 percent for some of Bailey’s clients. For employers seeing similar bumps, especially those with more than 100 employees, it might make sense to use this bonus year to shop aggressively among different carriers, and to size up alternatives, including partially self-funded plans.
Something else to consider: A wellness plan. Starting in 2014, employers will be able to vary premiums by up to 30 percent based on employee participation in qualifying wellness programs, and up to 50 percent based on tobacco use. In theory, this allows businesses to encourage better health habits, which will drive down overall healthcare costs over the long term. Certain businesses implementing new wellness programs could also qualify for a piece of the $200 million in grant money being offered by the Department of Health and Human Services to help create them, although -- surprise -- the agency has not yet finalized the application process.
Paul Ashley, an advisor at First Person, a benefits firm in Indiana, says, “The latitude given to employers for wellness incentives is a helpful tool that our clients welcome and will continue to leverage as long as fits into their overall strategy.”
Stay tuned. Says Bailey: “We do believe that we will continue to see a significant amount of fluidity in the clarification of the law from the government.” At this point, who’s to argue with that?