It’s hard to believe that the Patient Protection and Affordable Care Act (PPACA) has been the law of the land since March 2010. That’s four years! Yet, for many of us, it seems like we’re just now starting to move forward.
From the time the law was enacted, employers have struggled to understand the need, architecture, acceptance, structure, and administration of healthcare reform, and there’s a cavernous social divide on the subject. In the end, however, there remains one relatively universal sentiment: employers are very confused about what to do to comply and are in search of guidance on planning for 2015 and beyond.
What follows is our variation on the traditional “Top 10” list. Here are eight essentials to help employers better understand what they ought to be considering as they prepare for the next wave of healthcare reform compliance.
- Seek professional guidance on what compliance means for your organization. If you have benefit plan advisors, agents, or consultants, give them a call. If they haven’t provided any general guidance to date, they aren’t doing their jobs. Hold them accountable and, if their ability to provide direction is substandard in your eyes, don’t wait — look for someone who can give you a roadmap to compliance. Missing the mark can be very costly!
- Make sure you understand how the law impacts your organization. This includes everything from determining if you’re a “large employer” to defining how your plan must cover “substantially all” full-time employees in 2015 versus 2016.
- Understand the penalties for noncompliance. Know if, how, when, and how much they could impact your organization.
- Recognize that there are certain benefit strategies that, when viewed through a different lens, may suggest a completely different approach. For example, the penalty to an employer that offers a plan that is either unaffordable or doesn’t meet the minimum coverage standard (assuming the “play or pay” mandate applies) is $3,000 per employee per year (applied pro rata). However, this is if and only if an employee buys federally subsidized coverage from the public exchange. In some situations, you may find that both the employee and employer can reduce their respective costs if the employer makes the plan purposely noncompliant. This may seem like a counterintuitive approach, but it can provide financial advantages to employers and employees alike.
- Consider alternative ways to finance your plan. The PPACA was introduced as a healthcare reform law. However, there are many different aspects of this law that are very definitely tax-related and could save employers money. Take self-funding, for example. One PPACA tax, commonly called the Health Insurance Tax (HIT), is scheduled to generate between $8 and $14 billion dollars annually between 2014 and 2018. However, this tax applies only to insured plans. Since self-funded plans are exempt, it may pay dividends to consider self-funding.
- Strategize early. We’ve all read about various parts of PPACA that have been delayed under the guise of “transitional relief” while the bugs of healthcare reform are slowly worked out, and it’s quite possible we may hear it again in the future. However, transitional relief is not a compliance strategy, so don’t count on it as a means to comply with upcoming requirements. An example of one high-priority item is measuring your full-time and part-time workforce to determine your strategy and the plans you’ll offer. This issue, like #5, may present different ways to get to a better result for all.
- Get your arms around reporting. How will the government know if your employee is eligible for a federal subsidy? You’re going to tell them. That’s right ... beginning in 2016, large employers will have additional data reporting requirements. If you don’t have an integrated human resource information system, you’d better consider one now.
- Get the executive team involved early and keep them engaged. Reform touches all aspects of your organization, from benefits to finance, and from scheduling to labor negotiations. Don’t think this is a one-dimensional compliance item relegated to a single division of the organization. Missing the mark on compliance could cost an organization dearly.
This is an incredibly complex law. The best strategy is to get out in front of it as much as possible. For more information, please give us a call.