Wednesday, 28 August 2013

Westhill Consulting – Tips for navigating Obamacare

Tips for navigating Obamacare

Think hard before your drop insurance entirely

Tambe said that might not make good business sense despite some companies might be tempted to abolish insurance benefits completely and let employees go to marketplaces to get coverage.

The problem is insurance purchased on the marketplace will be more expensive for individuals.  Then the company will risk talent leaving the company for a competitor who offers them the less expensive option if the company isn’t willing to compensate by raising their salary.

“It may work to keep costs down but you’ll have a hard time keeping talented folks,” he said.

Other federal programs could help you

For households making under 400 percent of the Federal Poverty Level, the ACA grants subsidies available on the public marketplace under certain circumstances.

Additionally there are current efforts for Ohio to spread out the Medicaid program to households making less than 138 percent of the poverty level.  This in turn if acted out would make more people eligible for those programs.

Not all individuals will qualify for subsidy even though most Americans will be eligible to obtain coverage through the exchange.  Employer-sponsored coverage may affect an employee’s ability to meet the criteria for the subsidy.

If there are many employees qualify for federal assistance, it will be reasonable to let them use those plans, particularly since employees being offered insurance by an employer aren’t allowed onto the marketplace if their employer is offering insurance deemed affordable, or 9.5 percent of their wage rate based on 130 hours per month for single coverage.

“A lot of folks qualify for these things, and there’s no penalty to employers,” Tambe said.

Know the paperwork

There are a number of new requirements employers need to be aware of in order to remain in compliance under the ACA. For instance, all employers are required to provide notices to new hires and current employees about the health insurance exchanges before Oct. 1.

Tambe said the fines for failure to comply can be steep. For example, if an employer fails to provide employees with an SBC, the potential penalty to the employer is $1,000 per employee per day.  There are also requirements that employers provide Summaries of Benefit and Coverage (SBC) to each employee 30 days prior to their renewal and 60 days in advance of any material changes to their plan outside of their renewal.

Avoid community ratings

Effective at renewal in 2014, one of the more substantial changes for employers with less than 50 employees is the new rating structure, Community Rating.  Community rating will need health insurance companies to give out health insurance policies to all people in an area, at the same price and without medical underwriting, in spite of of their health status.

Under this new structure, most groups will see a substantial increase in rates by as much as 30 percent to 50 percent, he said.  A strategy that Tambe is implementing for some of his clients is to renew their current group plan Dec. 1, 2013, which will allow them to maintain their current rating structure rather than immediately moving to community rates.

Consider how you want to grow long-term

Industries, if not all, some, like food service industries, retail, and those with large unskilled workforces have traditionally employed large numbers of part-time employees.  These industries may have to adjust workforce toward larger numbers of part time workers in order to avoid the requirement of providing insurance to full time workers, Mullins said.

“Maybe you’ll have to consider hiring a few extra part-timers to get your people under 30 hours,” he said.

Tambe also said the rules are different for companies with under 50 employees compared with those employing more than 50, which should also factor into business growth plans.

Controlled groups beware

A controlled group must provide the same benefits to all of the employees in all of the companies.  This companies are defined by the Internal Revenue Service as multiple corporations connected to a single parent corporation through stock ownership.

Failure to do so could be considered discrimination, and land those companies an IRS audit, Tambe said.

Take a look at self insurance

More companies, particularly smaller companies, have been looking into self insurance, and some providers are now offering self-insured options for as few as 15 lives, Tambe said.

Here is how it goes, in a self-insured product, the employer pays all employees’ minor health costs out of pocket, and buys coverage only for major expenses only, “major” expenses defined in the range of more than $50,000 for an individual, or more than $500,000 for the whole company, although there’s a wide range of policies companies can buy.

Tambe said it can be a risk, but if employees are generally healthy, chances are companies will save money.

Build a team of experts

Ultimately, Tambe said there is no single strategy for navigating the ACA. It will affect companies differently depending on their industry, size, and workforces.

Tambe said it’s important for employers work with a knowledgeable and trusted advisor to come up with a long-term plan for their companies.

For that reason, he said professional employer organizations, or PEOs, have been a popular option for employers to outsource the responsibility for ACA compliance, as have using temps.

“For any one employer trying to do this, it’s going to be a whole lot of work for HR,” Tambe said.