The Affordable Care Act certainly qualifies for the term “political football” – the scrum that has surrounded healthcare reform has been impossible to ignore. If you are a business owner or executive, this ongoing political battle has not been very helpful; most of the conversation is focused purely on the politics of the law, and not on how employers need to proceed in order to be compliant. And that has left many employers with a lot of questions.
Here are the five most critical questions employers should be asking about ACA:
- Can we afford to sit back and wait? That is not a good idea. The so-called “employer mandate” – which requires employers to offer qualified plans to their employees – goes into effect on January 1, 2015. That is less than eight months away. Ideally, you should have been planning all along and preparing for significantly higher levels of reporting. If not, you need to rapidly accelerate your preparations.
- What are we required to do? There are many requirements for employers, but they depend upon the size of your organization. Employers with 100 or more employees need to offer an ACA-qualified plan starting January 1 (or whenever your health insurance plan renews during the calendar year), or pay a penalty for each employee. Employers with between 50 and 99 employees have until 2016 to comply. Businesses with fewer than 50 full-time and FTE employees do not need to meet the play or pay requirements. Some employers have contemplated laying off workers to reduce the size of their workforce and get under this threshold.
- What is the penalty for not providing an ACA-compliant health plan? The penalty is the number of employees minus 30, multiplied by $2000. In many instances, the penalty will cost less than providing health benefits would, but employers should also consider the cost of potentially lower morale.
- What is considered fulltime? For the purposes of the ACA, 30 or more work hours in a week is considered fulltime. That has led some employers to consider cutting workers’ hours to 29.5 per week.
- Should we consider a Private Exchange? A private exchange is similar to the national healthcare marketplace in that employers pay a certain amount for their employees to “go shopping” for the health insurance that best suits their needs. Several large insurance companies are offering private exchanges. The argument for private exchanges is that employees have many more options and can select the perfect plan for their situation. Additionally, the employer is able to have a set cost – whatever they decide to contribute. One argument against private exchanges is that employees are not equipped with enough understanding of insurance to make the best decision. Therefore, employers who offer a private exchange should plan to put resources towards employee education.
Contact us at 215.441.4600 or your health insurance plan advisor if you have questions or would like to discuss how this topic may impact your business.