Unraveling the Complexities of the Healthcare Law

October 1, 2013 is an important date in the implementation of the Affordable Care Act (ACA). That is the date when open enrollment for health insurance coverage through the new "Marketplace" begins.

Delay in the Employer Shared Responsibility ("Play or Pay") Mandate

Under the Affordable Care Act, there is a shared responsibility mandate that imposes a penalty on a "large employer" if one or more of its full-time staff members obtains a premium tax credit to help purchase health coverage.

The penalty was supposed to begin on January 1, 2014. But on July 2, 2013, the White House announced that it was going to delay the enforcement of the shared responsibility penalty until January 1, 2015.

For this purpose, a large employer is defined as one with 50 or more full-time or "full-time equivalent" employees. It includes for profit, not-for-profit and government entity employers.

A full-time employee is one who works on average at least 30 hours a week.

As part of the Marketplace, which is scheduled to begin January 1, 2014, individuals and employees of small businesses will have access to coverage through a new competitive private health insurance market. According to the U.S. Department of Labor (DOL), "the Marketplace offers one-stop shopping to find and compare private health insurance options."

Employers must provide employees with notice of coverage options available through the marketplace by October 1. (Click here for more information from the DOL.)

Despite these upcoming deadlines, many businesses are still confused about their responsibilities under the ACA and unsure how healthcare reform will affect their operations.

Survey Finds Caution and Uncertainty

According to the U.S. Chamber of Commerce's latest quarterly survey, the healthcare law is the top concern for small businesses.

Here are some key findings from the second quarter Small Business Outlook Survey of executives in companies with less than 500 employees and annual revenue of less than $25 million:

  • The majority (71 percent) of small businesses stated the healthcare law makes it harder to hire.
     
  • Concern about the healthcare law has increased by 10 points since the U.S. Chamber's second quarter 2011 survey and by four points since last quarter.

  • Only 30 percent of respondents say they are prepared for the requirements of the law, including participation in the Marketplace, and 25 percent say they are unaware of what is required.

  • Among small businesses that will be affected by the employer shared responsibility mandate, 50 percent say that they plan to either cut hours to reduce full timers or replace full-time employees with part timers to steer clear of the shared responsibility mandate. And 24 percent responded that they will reduce hiring to stay under 50 employees.

Government Launches Web Tool

Meanwhile, the White House announced it is "listening to the needs of the business community" so it launched a new software wizard as part of its BusinessUSA website to help owners and executives understand various facets of the ACA. The tool provides some guidance about responsibilities based on the state a business is located in, the number of employees it has and other information.

For example, if you tell the wizard a business is located in Illinois and has more than 50 full-time employees, it will ask whether the business already offers health coverage and plans to continue offering it, does not offer insurance or does not offer it and is not planning to start. The wizard then provides links to web pages of information about the penalty, how to calculate the number of employees, a glossary of healthcare reform terms and more. In some cases, it links to other government websites such as the U.S. Department of Health and Human Services.

While the new software wizard may help answer some of your questions, some of the language is vague and confusing. It is not a substitute for an employer getting professional advice about its responsibilities under the healthcare law. For more information about your situation, consult with your HR or employee benefits professional, employment attorney and tax adviser.

© Bizactions LLC.

 

Back to News