What employers should be considering in 2014 — after more ACA changes

On Feb. 10, the U.S. Treasury Department issued final regulations implementing the employer shared responsibility provisions of the Affordable Care Act (ACA), providing some transition relief to “applicable large employers.” These final regulations increased the categories of employers from two (large and small) to three (large, midsize and small). The employers shared responsibility has been delayed until 2015 on a modified basis for large companies (100 or more full-time equivalent employees) and until 2016 for midsize companies (50 to 99 full-time equivalent employees).

Then on March 5, the Department of Health and Human Services extended the transition relief announced last November for two years, which gives health insurance companies the option of renewing current policies without adopting all of the ACA’s market reforms.

“On the surface, both of these announcements sound like good news. The end result, however, is adding another layer to the confusion and uncertainty about the ACA’s constantly changing deadlines and regulations,” says Chuck Whitford, a client advisor at JRG Advisors.

Smart Business spoke with Whitford about the newest ACA changes and what they mean for business owners.

What’s the takeaway from these delays?

Despite the chaos, employers shouldn’t use this as rationale for not fine-tuning health care and employment strategies. Even if you have fewer than 50 full-time equivalent (FTE) employees, your company might grow making it important to be prepared. There also are some reforms that take effect this year for employers with less than 50 FTE employees.

How do you recommend employers manage their ACA requirements now?

How employers schedule and manage hours this year will determine if an employee is considered full-time next year. Often there is little coordination between supervisors and HR. Without a policy to manage the hours worked by part-time employees, employees could cross the 30-hour threshold. Similarly, misclassifying employees as independent contractors can now trigger ACA penalties.

To avoid penalties, large employers still need to provide coverage to 70 percent of full-time employees in 2015. Now is the time to look into adding a plan option that meets the affordability and minimum value requirements (referred to as a Bronze plan) and to explore different funding arrangements.

In addition, the second announcement has led to some insurance companies planning to offer both ACA-compliant plans and plans that are not compliant with the ACA. Each state must give permission, and then it is up to each insurance company if it wishes to offer both plan types to individuals and small employers. This will require careful analysis at renewal time to determine the best path.

What about those with grandfathered plans?

Groups with less than 50 FTE employees need to pay attention to some of the new rules that apply to employers of all sizes. If you have a grandfathered plan, it was in existence on March 23, 2010, and remains essentially unchanged.

Although grandfathered plans are exempt from some of the ACA’s mandates, your plan still has to offer coverage to adult children up to age 26 beginning this plan year. Consider the advantages of maintaining the current status versus the cost savings of making the types of changes that will remove grandfathered status.

What else should employers know?

Effective for plan years on or after January 1, 2014, a health plan may not impose a waiting period that exceeds 90 days. Under certain circumstances, an employer might be able to wait until after an orientation period, not to exceed one month, to start a waiting period.

In addition, the reward under a health-contingent wellness plan was limited to 20 percent of the cost of coverage. Now, for 2014 plan years, the maximum permissible reward increases to 30 percent of the cost of coverage and up to 50 percent of the cost for programs designed to prevent or reduce tobacco use. It’s also important that any program you implement complies with the ACA’s nondiscrimination requirements.

Chuck Whitford is a client advisor at JRG Advisors. Reach him at (412) 456-7257 or [email protected].

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