Businesses can use time to get health care right
The extra 12 months that businesses with 50 or more full-time workers gained earlier this month before having to meet Affordable Care Act health insurance requirements may be important: Although the smallest businesses are unaffected by the implementation date change, many of those whose employee head counts hover around 50, or are higher, face some interesting decisions.
What the ACA considers larger employers — 50 full-timers and equivalents, or more — now have breathing space, says Carl R. Mowery. managing director of Grant Thornton LLP's compensation & benefits consulting practice at the firm's U.S. headquarters in Chicago, Mowery is among those who think businesses should use the time to get their health care coverages — and reporting — right.
To him, that means getting additional people, beyond HR, involved.
"Many organizations are fundamentally changing their operations" in response to ACA mandates, Mowery says. One issue: Businesses that lease employees may find that these workers qualify as employees under ACA — or the business and the temp agency-leasing company are deemed to be joint employers.
The question businesses must answer, Mowery says: What is the bottom-line effect of health care reform? "Financial and tax people need to be in on those discussions," he says.
Penalties for failing to comply with the ACA technically are excise taxes — and therefore will be imposed and collected by the IRS. There are 144 pages of new federal regulations that spell out the IRS' ACA role, Mowery says.
There's even a new fee, warns James Doyle: A Patient-Centered Outcomes Research Fee, intended to help support clinical effectiveness research. The initial fee is only one dollar per covered individual, but Doyle, president of The Arista Group LLC, an Arlington Heights insurance broker, is concerned that "Many employers are unaware of this fee."
The kicker is that the fee must be paid July 31 for plan years ending the previous October 1. Look at Form 720, the IRS' Quarterly Federal Excise Tax Return.
Be especially careful if you're planning to realign your workforce, perhaps to dodge the 50-employee level. In fact, says Sharon Harder, president of C3 Advisors LLC, Wheaton, employers looking to lower their head counts or reduce workers' hours might want to talk first to an attorney who is an ERISA expert.
ERISA is the Employment Retirement Income Security Act of 1974. The law protects employee rights in such vested benefits as retirement plans, but "also applies to such nonvested plans as health insurance," Harder says.
Workforce restructuring — shifting jobs and hours to avoid the requirement to provide health insurance, for example — is the key. "If an employee is eligible for health care benefits under an existing plan (but) the employer curtails working hours specifically to create ineligibility (for coverage) ... an ERISA complaint may be actionable," Harder wrote in a C3 Advisors blog (c3advisors.wordpress.com).
The Department of Labor enforces ERISA rules.
There are other issues, and next year's Congressional elections could bring more changes. The extra year may help.
• Jim Kendall welcomes comments at JKendall@121MarketingResources.com
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