Is Your Company Prepared for the Affordable Care Act Requirements?
By Sharon Stiller, Esq.
Companies should still plan accordingly, regardless of the delay that was announced in the implementation of the employer mandate in “Obamacare.” Some of the significant provisions of the Affordable Care Act may still be effective January 1, 2014, although the delay has caused some confusion in the business community because we do not know which parts of Obamacare are not delayed and many regulations have not been finalized.
But regardless of the confusion and extension, companies should start planning now, being aware of pitfalls within the legislation to avoid penalties. In fact, companies can look at the delay as an opportunity to conduct planning that might not otherwise have been available to them.
Is your company a large employer under federal health care reform law?
Many companies think they are not covered by health care reform because they have fewer than 50 employees, and others are asking if they can split into smaller companies to avoid coverage. The law contains provisions preventing avoidance tactics by companies that are related to each other. Using the Internal Revenue Code’s controlled group rules and affiliated service group rules, two or more employers may be grouped together to be treated as a single employer. Even if you are a smaller company, it is important to review whether parent-subsidiary, brother-sister or combinations of those companies, trades or businesses, or even constructive ownership or attribution will cause the company to be deemed to be a “large employer” under the legislation. Families involved with a number of businesses and other groups of businesses must review these rules to determine coverage.
Are your company’s definition of full-time employees and other policies consistent with the law?
In contrast to many company’s own definitions, the legislation treats anyone working 30 or more hours as a full-time employee. This means that the business must offer coverage under the law to people who fit within that category, regardless of whether the company deems them to be full-time workers for other benefits. Inconsistent rules should be reviewed. There are other restrictions, such as those concerning waiting periods that must be reviewed.
How do you determine whether the health insurance your business offers is affordable under the law?
Health care reform not only mandates that large employers provide coverage to full time employees, but the coverage must be affordable. Companies will have to perform calculations to determine if the coverage is affordable and the IRS has released guidances to help companies engage in the needed calculation.
Should your business provide the necessary coverage or face the penalty?
For some businesses, providing affordable health care coverage is a moral decision but for most, it is an economic decision. In advance of implementation, businesses must perform a calculation to determine whether it is more financially viable to provide coverage or to pay the penalties. The calculation is different for each business, and should be done far enough in advance of the implementation date so that the companies can engage in the necessary planning. The delay in implementation of the employer mandate provides a perfect opportunity perform the calculations and then make the necessary strategic decisions. While employees will also need to make decisions about whether to take the insurance offered by the employer, to obtain it from a state exchange, or to not have insurance, the penalties facing employees are minor compared to those facing the businesses.
How will your business gear up to provide the necessary notices and comply with the recordkeeping requirements?
By October 1, 2013, most businesses, not just large employers, will be required to provide employees with notices of health insurance and state exchanges. As of October 1, 2013, employers will also be required to provide this notice to new employees at the time of hire. Employers are also required to use a revised model COBRA notice. Other notice and recordkeeping requirements will also apply. It is unclear whether the White House’s announcement will affect this requirement and if it does not, companies need to be ready.
The Obama Administration’s decision to delay Obamacare should not give companies reason to do the same. While some believe this legislation will never actually be implemented, companies should still prepare and begin to make important business decisions as it pertains to the law. If not, they could find themselves in 2013 or 2014 failing to meet certain federal requirements and facing fines, and certainly in 2014, not having enough time to make important choices about health care coverage.
Sharon Stiller is Director of the Employment Law Practice at Abrams, Fensterman.