Affordable Care Act – What Employers Need to Know Now
On October 1, the Patient Protection and Affordable Care Act – more commonly known as the Affordable Care Act (ACA) or, more informally, Obamacare – officially debuted. While the implementation of the employer mandate provisions of the ACA has been delayed until 2015 (for employers with 50 or more full-time equivalent employees), entrepreneurs and small business owners need to be fully informed and prepared for compliance. But with so much political discourse, where can you find practical information?
The U.S. Small Business Administration has a wealth of resources, from articles to webinars to a glossary of terms, for small business owners interested in learning more about how the ACA will impact their businesses.
Closer to home, our colleagues at Regents Bank in San Diego sponsored a symposium on the ACA for employers earlier this year. The symposium, presented in association with GS Levine Insurance Services, assembled a panel of experts on the ACA 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 Cantano, a partner in the law firm of Barton, Klugman & Oetting, LLP; and Kristen L. Kahle, senior vice president of Benefit Exchange Alliance. Gary Levine, CEO of GS Levine Insurance Services, Inc., served as moderator.
Among the key points raised by panelists were the following:
- Cartano noted that the law applies differently to companies of varying sizes and revenues. 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. The panelists agreed that for small businesses, the cost of health care benefits will likely increase.
- All employers with at least $500,000 of revenue were required to provide a notice to employees by October 1, 2013 entitled “Notice of Health Care Exchange.” It is a boilerplate notice, provided by the government online, advising employees of certain benefit options and requirements under the ACA. In addition to the original posting to all employees, the notice must be given to all new employees on the date of hire.
- 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 to help determine eligibility.
- 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.
- As the political discussions ongoing in Washington illustrate, a great deal about the ACA remains to be explained, learned and digested before it can be fully integrated into business planning. However, the time for employers to start learning and digesting the information available about ACA is now.
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