Healthcare experts: Despite delay, get ready for ACA

Despite delays in employer penalties and lingering uncertainties about other aspects of the law, business need to spend the coming year preparing for the Affordable Care Act.

“Determine if you will pay or play. Know your maximum liability,” said Russ Sullivan, vice president of Health Care Solutions at Associated Industries of Massachusetts, speaking at session last week held by the Nevada Business Group on Health and sponsored by the Carson City Chamber of Commerce, Carson Valley Chamber of Commerce, Carson Tahoe Health and Carson Nugget Casino.

Under the law, employers with 50 or more employees working 30 or more weekly hours must pay a penalty if an employee receives a subsidy for insurance via an exchange because the employer did not offer either affordable insurance or insurance that meets the minimum value as defined by the law.

That employer shared-responsibility provision, known as pay or play, was delayed until 2015, but Sullivan said business should be doing a cost-benefit analysis now to decide whether to comply or pay the fine.

That equation, he said, is the number of employees minus 30 times $2,000 a year. An employer with 100 full-time employees, for example, would pay an annual penalty of $140,000 for non-compliance.

“It is almost always less to pay the fine, but it also depends on what kind of company you want to be,” said Sullivan.

Sullivan said based on his experience with health care reform in Massachusetts, the onus is on a business’ human resources department to understand the law.

“I saw this all come down to the HR person who has other things to do. The HR role is incredibly important,” said Sullivan. “HR is the person who communicates with the vast majority of people and also educates the leadership team.”

He said a company’s benefits person should know a few key things about the law, and let the rest go.

“Don’t try to know it all,” he said.

Do know how to determine the number of full-time and full-time equivalents. And despite the delay in the penalty, calculate that now.

“Do you have to track employee hours for eligibility?” said Sullivan. “I say ‘yes.’ Nothing in the regulations says that has been delayed.”

A plan provides minimum value, as defined by the law, if it covers 60 percent or more of costs, leaving 40 percent or less to the employee.

And a plan is affordable if it costs an employee no more than 9.5 percent of his household income.

Sullivan said that because insurance providers usually contract with employers to pay a minimum of half the premium costs, plans usually are considered affordable for employees making at least $30,000 annually or even for employees making less than that if there is additional household income.

But some employees will fall through the cracks and be eligible for subsidies via an exchange. So businesses must decide, as part of the cost-benefit analysis, if it is more advantageous to bring all employees under the 9.5 percent threshold and “shut the door,” on any of them going to an exchange, said Sullivan.

Many businesses will feel little impact from the law because they already offer employees insurance that meets all the requirements of the new law. Other companies won’t be subject to much of the ACA’s mandates.

But Sullivan and others caution that all businesses, large and small, need to pay attention to Obamacare.

“A misconception that most small employers seem to have is that the ACA doesn’t apply to them or their employees,” says Julie Ann Utley of Jewels Benefits Inc., a Carson City insurance broker who attended the meeting.

Utley said small employers offering health insurance must comply with the law’s mandate that the maximum eligibility waiting period for an employee to be eligible for employer-sponsored benefits is no more than 90 days. And starting in 2014, the only way to receive the small employer tax credit is to purchase their group medical plan on the exchange.

But also a common misconception among small businesses, says Utley, is the law affects them more than it does.

“Many small employers think it is now the law that they provide medical insurance to their employees and that is not correct,” says Utley. “They are not required to provide benefits and they will not be subject to a penalty.”