Planning Ahead for the Health Care Law
October 1, 2013
The federal government recently announced that one of the key provisions in the massive 2010 health care legislation-the Patient Protection and Affordable Care Act (the PPACA)-will be postponed for one year. This will give many employers extra breathing room. Initially, employers with 50 or more full-time employees faced penalties in 2014 under the "play or pay" rules if they failed to provide affordable health insurance to employees. Now penalties under this provision won't be imposed until 2015. Nevertheless, this does not mean that employers, nor employees for that matter, can or should relax. Far from it. While other provisions of the PPACA will take effect at varying dates, it is still advisable to begin planning now for the health insurance mandate. Additional guidance is expected from the government and IRS. In the meantime, here are several critical aspects to consider. Large employers: Employers may try to split into smaller companies to avoid the mandate. Be advised that two or more small companies may be grouped as a single entity for this purpose under IRS rules for "controlled groups." Similarly, even an existing small operation may have to comply if it is part of a parent-subsidiary or brother-sister relationship. Consult your insurance advisor to get a clear idea of how these rules apply to your specific situation. Full-time employees: The PPACA treats anyone working 30 or more hours a week as a full-time employee. Therefore, an employer must offer coverage under the law to employees who meet that definition, even if they are not treated as full-time workers for other employee benefits. Affordability: Not only does the PPACA require large employers to offer health insurance to full-time employees, but coverage must be affordable. Calculations will have to be made to ensure that coverage falls within IRS guidelines. Professional business advisers may provide assistance. Economic decisions: Employers may want to determine if it is financially more viable to provide coverage or to pay the penalties. The calculation is different for each business. Have determinations made well in advance of the new 2015 effective date. Note that employees also face choices as to whether to accept insurance offered by an employer, obtain coverage from a state exchange or to pay the individual penalty for failing to obtain insurance. Notification and recordkeeping: Most businesses were required to notify employees about health insurance and state exchanges by October 1, 2013. Going forward, notification must be provided promptly to new hires. Other notice and recordkeeping requirements will be phased in. SHOP exchanges: An employer with 100 or fewer employees will be able to purchase a health plan through the Small Business Health Options Program (SHOP) exchange. But the PPACA permits states to limit the small-group market to employers with 50 or fewer employees until 2016. Small businesses may still contract with traditional health insurance companies. Numerous challenges will face employers as these rules gradually take effect. It makes sense to prepare ahead of time to meet the requirements.