Uncertainty over the impact of health care reform on their businesses has created plenty of anxiety among HR managers and those in the C-Suite.
A recent survey by ADP found almost half of large-company finance managers aren’t fully confident that they understand their responsibilities under the Patient Protection and Affordable Care Act. At small companies, the study found, just 28 percent of those surveyed have developed any sort of plan for controlling their health benefits costs in the wake of health care reform. At large companies, that percent rose to 40 percent — still not very confidence-inspiring.
Executives know reform is going to rock their boat. When asked by ADP whether they thought the public insurance exchanges would have an impact on their company, half of small company respondents thought it would, while nearly 70 percent of large companies responded affirmatively.
To help employers get a better handle on the act’s requirements, ADP has come up with following recommendations for coping with health care reform.
1. Know the requirements and deadlines: Don’t wallow in fears that are groundless with respect to your company. ADP says you should “invest the time and resources needed to clearly comprehend the act’s legal requirements and time frames in order to accommodate its tax implications and avoid penalties for non-compliance.” Establish a timeline with key milestones to help guide your process.
2. Determine administrative impact on your company: How will oversight of changes mandated by the PPACA increase administrative burden? “A prime example of an ACA provision with potentially large administrative impact is Shared Responsibility. Beginning in 2015, it requires tracking each employee’s full-time or part-time status every month, and maintaining that information as part of employee tax records.” Those kinds of requirements will clearly add to HR’s tasks, and may require additional manpower, at least while systems are being set up.
3. Calculate financial implications: There are myriad ways the mandated healthcare changes, reporting requirements, additional taxes, etc., will affect your cost of doing business. Coverage mandates for your benefits plan design, as well as reform-related taxes and fees, must all be taken into consideration. Over-budget for the short term at least.
4. Create a written summary of benefits and coverage for employees: This is a four-page (or less) summary of your plan you must provide your employees with. It must be clearly written. Make sure you obtain acknowledgement of receipt of the SBC from employees.
5. Notify your employees of public exchanges: This is the notification of insurance options due Oct. 1. Is this required? Yes. Will you be fined if you don’t do it? Maybe not. Do it anyway. It’s a great way to communicate with your workers.
Sign ’em up: If you have at least 50 full-time employees, you have to offer them affordable health coverage. Make sure you offer the opportunity to enroll to all eligibles. Then develop a system to track, update and report on employee eligibility and enrollment to maintain ongoing compliance.
7. Enroll employees’ dependents: The law requires employers to offer coverage to qualifying dependent children of full-time employees up to age 26. You may also want to consider conducting a dependent eligibility audit, which typically show as many as 15 percent of dependents claimed by employees are not qualified for benefits.
8. Prepare for automatic enrollment: Employers with 200+ full-time employees will soon face new rules for enrolling new employees in the company’s group health plan. If you haven’t already, you’ll need to start thinking about solutions to address this requirement.
9. Assess your exchange/coverage options: Employers will generally choose from three different plan approaches for covering their employees – employer-sponsored plans, private exchanges and the new public exchanges created under the act. You’ll need to determine which works best for you, from both a financial and employee recruiting/retention standpoint.
10 Get ready to define and track full-time and part-time employees: The act requires this tracking — it’s the basis for many calculations that are coming down the pike. Start tracking now so you won’t have to go back and try to recreate the data later.
11. Offer an employee wellness program: An earlier ADP study showed wellness programs are an increasingly popular strategy for offsetting the expense of healthcare – without passing on additional costs to employees.
12. Get a grip on your medical loss ratio rebates: These are sent to employers from their insurance carrier whenever health insurers do not spend at least a certain percentage of the prior year’s health insurance premiums on healthcare services. If you receive MLR rebate dollars, the plan must make a fiduciary decision about using the dough. A best practice is to communicate to your employees your intention as to how the MLR rebate will be used.
13. Limit employee flexible spending accounts (FSAs): Prior to the enactment of the act, the IRS permitted employers to determine the maximum amount an employee could set aside tax-free in a Flexible Spending Account. Going forward, you will need to enforce a $2,500 annual limit on all employee healthcare FSA contributions.