Employers continue to have questions about the details of complicated health-care reform law almost a year after the Patient Protection and Affordable Care Act was enacted.
Even though numerous lawsuits have been filed by states on the constitutionality of the mandate for individuals to purchase health insurance and although some legislators would like to repeal it, the Affordable Care Act is still “the law of the land” and employers must deal with cascading regulations coming down now and over the next several years, said Susan M. Rash, vice president of BB&T Insurance Services.
“There is a lot of work you as employers will need to do,” Rash said.
On Thursday, about 100 professionals, business leaders and human resources personnel attended an employer health-care reform seminar led by Rash, the legislative chair for the National Association of Health Underwriters.
Gateway Health Alliance, a Danville-based health benefits management company, partnered with the Danville Pittsylvania County Chamber of Commerce to inform employers of the coming changes.
Starting with last year’s open enrollment period, many people saw changes to their health insurance plans, including coverage of children up to age 26, no lifetime limits, no pre-existing condition exclusions for children and comprehensive coverage of preventive services.
“That’s a nice thing particularly as we’re moving toward high deductible health plans,” Rash said about carriers covering 100 percent of preventive services. “That’s kind of the plus.”
Now, employers will need to start keeping track of the total value of health benefits to be reported on employees’ W-2 forms starting next year for transparency purposes.
“This stuff is expensive. This is what it really costs,” Rash said. “Many of you know this, but many of your employees don’t.”
Additionally, employers with fewer than 100 employees who are thinking about starting wellness programs may want to take advantage of grants that will be available starting in October.
Employers may want to start letting their employees know in advance that the tax-free maximum for flexible spending accounts will change to $2,500 in 2013, Rash said. That way, they can get braces or other more expensive services now.
Most changes will happen in 2014, when individuals are required to buy insurance and employers with more than 50 employees would face fines for not offering insurance coverage.
Employers may not know they could be penalized. The basis would be on employers who have 50 full-time “equivalents,” and full-time is considered 30 hours in a week, Rash said. Employers must add up the hours of all the part-time employees, including seasonal workers after 120 days, to see how many full-time equivalents they employ, Rash explained.
Additionally, small business up to 100 employees and individuals can buy insurance through exchanges set up by each state. The federal government provides subsidies for those getting insurance this way, but the money for those subsidies comes from the fines and fees, Rash explained.
If an employee enters the exchange because the employer-offered coverage was “unaffordable,” the employer could pay a penalty of $3,000 for each full-time employee who receives a tax credit or cost-sharing reduction, she said. This would also require getting information from exchanges, as affordability is based on household income.
Additionally, employers will need to divulge more information like who is covered on their plans and what type of coverage. Employers will need to adhere to specific notices at open enrollment to employees, like how they’re able to enter exchanges, she said. Model notices are available on the Department of Labor website.
“I promise you, right now there’s not an HR system in place that can do this,” Rash said.
In 2018, insurers would need to pay a 40 percent excise tax on high-cost “Cadillac” plans that are more than $10,200 a year for an individual and more than $27,500 a year for a family. This could affect self-insured companies.
One “sweet spot” for small businesses with fewer than 25 employees is they could get a tax credit worth up to 35 percent of the premium, Rash said. For those with fewer than 10 employees, this could help a business begin offering coverage. Rash recommends talking to an accountant about this and visiting the IRS website.
John Williams, CEO of O&W Enterprises that owns Empathy Rehab in Danville, questioned if premiums for coverage would rise because it’s hard to budget or plan ahead without knowing what the costs will be.
“I’m just fearful the costs are really going to go up,” Williams said.
“I’m fearful of that, too,” Rash replied.
The essential benefits to be covered are being disputed right now “behind the scenes,” but the more items that need to be covered, the more likely the cost would rise, Rash said.
Williams, like others, would like to know more. O&W Enterprises employs 27 people in its physical and occupational therapy business and offers comprehensive insurance as a way to recruit hard-to-find workers. He plans to continue offering health insurance as a benefit and still needs to determine the costs and benefits of health-care reform for his small business.
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