Were in the throes of the Affordable Care Act now. Part of the reality check for brokers and employers at this time is the looming shared responsibility requirements in the large market, and even more pressing is the upcoming slew of renewals for smaller companies (when many will revert to new ACA community rates). As these issues draw near, determining how to sponsor health benefits has never been a more complex and difficult decision.
Here are the vexing questions employers will be looking for answers to in the coming months:
- Does my part-time workforce classify me as an applicable large employer and if so, will I pay penalties? A companys size will determine if they are eligible for shared responsibility penalties. This determination will, of course, include the hours of their part-time workforce and will exclude employees that are Medicare- and Medicaid-eligible. For employers with variable hour employees, this calculation will be even more challenging.
- How does my affordability equation play out? This is not a simple matter; however, companies that apply a surcharge on their wellness plans or a tobacco credit need to consider how those initiatives factor into what is the measured employer contribution.
- Does my affordable plan negatively impact my employees? The ACA rules disqualify employees from receiving subsidies if the employers plan is considered affordable (9.5% of W2 income). These subsidies as well as plan cost-sharing (out of pocket) adjustments provided through the ACA can be so generous they could consider changing jobs.
- Does it work out better financially if some of my employees peel off and go to the exchange? As laid out above, some employees may be much better off going to the public exchange than being covered on their employers plan. This may also be more advantageous for some employers depending on premium, cost sharing and penalties.
- How do you determine equitable contribution with individual rates? As new ACA plans hit the small-employer market in 2014, they will have to rethink how they structure their contributions, especially if they have composite rate. While a flat dollar contribution seems fair on the surface it will penalize older employees.
- How do we plan for the excise (or Cadillac) tax? Most plans are not projected to hit the excise tax in 2018 until you consider spending account contributions (FSA, HSA and HRA). Both employee and employer contributions count in this case and will become a central discussion as it relates to this tax. For this reason, these amounts should be monitored in the coming years.
Michael Weiskirch is principal at EmployeeTech, Inc. Reach him at (847) 236 1932 or email@example.com.
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