Tips for Employers to Prepare for Major Health Care Reforms
We cannot thank our Affordable Care Act seminar panelists enough for the valuable information they imparted to our 100-person audience on Tuesday, June 11 at Morgan Run Club & Resort. In case you missed it, check out the highlights below.
Many San Diego employers are looking for help in preparing for the potentially massive changes to insurance benefits under the Affordable Care Act reforms, parts of which will take effect in less than six months. Recently, Regents Bank, in association with GS Levine Insurance Services, assembled a panel of experts on the Affordable Care Act to address the questions and concerns of local business owners.
The symposium, attended by nearly 100 business owners and professionals, featured panelists Ross Afsahi, president of GS Levine Insurance Services, Inc.; David J. Cartano, a partner in the law firm of Barton, Klugman & Oetting, LLP; and Kristin L. Kahle, senior vice president of Benefit Exchange Alliance. Gary Levine, CEO of GS Levine Insurance Services, Inc., served as moderator.
During the discussion, Cartano noted that the law applies differently to companies of varying sizes. He explained how different parts of the Affordable Care Act will apply to companies with one or two employees; companies with at least $500,000 of gross revenue; companies with more than 20 employees; companies with less than 25 employees; companies with less than 50 employees; companies with less than 100 employees; and companies with more than 250 employees. He commented that companies with fewer than 50 employees are generally not required to provide health insurance for their employees. Employees who are not covered by an employer plan will be responsible for obtaining their own health insurance with after-tax dollars or paying a penalty to the IRS.
Cartano noted that beginning in 2014, small employers with less than 50 employees and uninsured employees may purchase standardized insurance policies at standardized prices through the exchanges that are now being established. The exchange in California is entitled Covered California.
The panelists agreed that for small businesses, the cost of health care benefits will likely increase. Kahle advised that one way to keep costs down is to opt for early renewal with one’s current benefits provider. By renewing in the fourth quarter of 2013, instead of in 2014, a company can delay implementation of the effects of the law until the next renewal date in the fourth quarter of 2014.
The panelists noted that all employers with at least $500,000 of revenue must provide a notice to employees by October 1, 2013. The notice is called “Notice of Health Care Exchange.” It is a boilerplate notice advising employees of certain benefit options and requirements under the new Affordable Care Act. The notice must be given to all existing employees and to all new employees on the date of hire. The government provides the form of notice online.
Employers that have more than 50 employees are required to provide health insurance for their employees or pay a penalty. The Obama administration announced after the date of this presentation that this category of employer will now have until 2015 before they will incur penalties for not providing health insurance. This extension was based upon the government wanting to readdress the complexities in the reporting guidelines employers must follow.
Determining whether the employer has 50 or more employees is, in some cases, complicated. Part-time employees may be treated as full-time equivalent employees. There are special rules for seasonal employees and affiliated groups of employers. Afsahi suggested that companies work with their payroll vendors. The vendors can help determine eligibility much more effectively than a business can on its own.
Much attention has and will continue to be given to whether a company with more than 50 employees should “pay or play” – i.e., should a company provide benefits coverage to its employees or not provide health insurance coverage and pay the resulting penalties. Afsahi suggested a financial analysis for each company considering pay or play as an option. He advised that for most large companies in Southern California, it will usually make financial sense to keep providing coverage since the penalty for not providing coverage is nondeductible, and uninsured employees will be required to obtain individual policies with after-tax dollars. He also advised that it is important to start reviewing and analyzing payroll and employee data sooner rather than later. He cautioned that health care benefits should be considered from a recruiting, incentive and morale perspective.
According to Afsahi, health care reform is likely here to stay. The goal of the law is to address access to and affordability of health care benefits. He believes that access to health care was addressed in the new law, but that the cost of providing health care has not yet been fully addressed.
Linking to Non-Regents Bank Websites
This icon appears next to every link that directs to a third party website not affiliated with Regents Bank. Please be advised that if you click this link you will be taken to a website hosted by another party, where you will no longer be subject to, or under the protection of, the privacy and security policies of Regents Bank. We recommend that you review and evaluate the privacy and security policies of the site that you are entering. Regents Bank assumes no liability for the content, information, security, policies or transactions provided by these other sites.