Is Your Company Ready for the Affordable Care Act?

It’s here. Whether you are for it or against it, the Affordable Care Act (ACA) has officially gone into effect. Does your company meet the requirements of the law?

In a recent seminar, Kathryn Carlson, senior vice president of human resources management for KPA, a dealer services and marketing provider, says there are several points to consider when making sure your company is compliant.

According to Carlson, most companies selected benefits for 2014 months ago. If you’ve already done so for 2014, the challenge now, she says, is determining if you made the right choice in light of legislative changes.

“It’s going to be difficult because regulations literally are coming in on almost a weekly basis,” Carlson says. “I expect an avalanche of clarification between now and March 31.”

One area in which many companies may be prone to costly mistakes could be in determining the number of full-time equivalents it has, she adds.

You may be able to reduce the overall number of hours for employees, but keep in mind, “if you have three people each working 20 hours, you would actually end up with a full-time equivalent,” she says. “Full-time equivalent is the sum total of your employees averaging 30 hours or more per pay period over a 120-day reporting period.”

Though few people in the U.S. have yet to hear about ACA, Carlson notes that the law isn’t being effectively communicated to employees.

“Many employers have not adequately communicated to the employees about the new benefits,” she states.

The open enrollment for the exchange program is now open and working, she says, and all employers are required to provide notice of the health care exchange to current employees and new hires. “You need to be including your health care notice in your new hire packet. That is the law.”

Additionally, the pay or play employer-shared responsibility portion of ACA has been postponed until 2015. “I do not believe this will be postponed again,” she says. “The government does have a tendency to postpone; however, this is such a critical area, and it went through such argumentative discussions about whether it should be postponed up front, that it would be unlikely … You need to start thinking about what you are going to do. You don’t get another pass.”

Some benefits employers could see in 2014 include an increase in wellness incentives for employees and a tax credit.

“Hopefully they’ll [wellness incentives] give your employees incentive to stop smoking, lose weight, get more exercise,” Carlson says. “A healthier workforce will have less usage of your plan, next year hopefully if you have less usage of all of your benefits this year … if you don’t have catastrophic events, if you don’t have a lot of ongoing chronic illness, you can drive your costs down … It is possible to actually decrease your insurance costs year-by-year, or at least remain static.”

While there is automatic enrollment for anyone with 200-plus employees, small employers with 25 or fewer employees may have some tax credits available to them, including up to 50 percent of the cost of providing health insurance as a tax credit.

If you are going to take advantage of the credit, Carlson notes, you need to be purchasing your plan through the “exchanges that have been set up directly for employers.”

Finally, she notes there are some alternatives to providing standard coverage under ACA.

Alternatives to standard health care insurance includes:

  • Self-insuring by paying for your employees’ health care. These plans don’t have to offer the essential health benefits that each state has defined, they are exempt from the annual insurance fee that insured small groups must pay and they will not contribute to or receive state-based risk adjustments for insured small group and individuals.
  • Private exchanges. Insurers will bring more private exchanges to the workplace and people will begin to understand they have to control their own health costs.
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