Mike Minton with Benefit Management Inc. was the keynote speaker at the Great Bend Area Chamber of Commerce roundtable for human resources professionals Tuesday noon at The Page. He provided a refresher on the Health Care Reform and Affordable Care Act. While there were tips and updates for owners of large companies, only general advice could be offered for small business owners, as the federal government continues to grapple with a lot of unanswered questions, he said.
“Small business owners will need to ask themselves if they want to take the leap from small to big when considering growth in the future,” he said. “Once they become large employers, that will open them up to fines, penalties, and increases in documentation and filing requirements.”
Where things begin to get really tricky is in determining if a company falls into the category of large employer or small employer, Minton said. The short answer is any company that employs more than 50 full-time equivalent employees is a large company, and less than that is a small company. But, some employees work variable hours, and the Internal Revenue Service considers an employee that works at least 30 hours a week full-time.
In order to determine where a company falls, he said it’s not too early to begin documenting the number of hours worked by variable, part-time and seasonal workers. He offered a complicated formula for employers to pinpoint how many full time employees they have.
If a company has fewer than 50, as of Jan. 1, 2014, it will not be required to offer a health insurance plan, and employees may go to the exchange, along with individuals who are self-employed. If there are more, they will have to offer at least one plan that is affordable and provides minimum value, Minton said. If they fail to, that could mean fines and penalties, some small and some large.
“If you document everything, you will likely avoid these even if you don’t get everything right,” he said. “Documentation is the key.
For small business owners, some of the plans they’ve offered their employees may no longer be available after carriers make the changes needed to comply with the act. Already, Minton said he has heard of 30 to 40 percent increases in premiums because of changes already going into effect. It will likely mean the end to high-deductible plans, too, because of the requirement that a plan provide a minimum value.
“In layman’s terms, that means a plan’s share of the total allowed claims cost is 60 percent or greater,” he said. “Most high deductible plans do not meet that requirement.”
Employers began implementing aspects of the Health Care Reform and Affordable Care Act in 2012, when it became mandatory for plans to include women’s preventive services. In April, flexible spending accounts (FSA) had new limits imposed of $2,500 per employee. A FSA allows employees to put aside money to cover medical expenses tax free, but it must be used within the plan year, or it is forfeited. Previously, there was no limit, though some employers capped savings at $5,000.
In July, employers will begin to be assessed a Patient-Centered Outcomes Research fee for each life covered by their plan. This fee helps to ensure patients received the information they need to determine what health care option is best for them in their particular situation. And on Oct. 1, open enrollment will begin for Health Insurance Exchanges set up by the federal government. Employees who make less than 400 percent of the federal poverty level would be eligible to take part in an exchange.
“That amounts to about $89,000 a year for a family of four,” Minton said.
When 2014 arrives, new employees who work at least 30 hours a week will be eligible for full-time health benefits one month after the first of the month after they begin work. That means, if they start work on Jan. 15, they will be eligible on March 1. However, if they begin work on Jan. 1, they will be eligible on Feb. 1, Minton said.
Employers will also need to track hours worked by new-hires working less than full-time. Small businesses will need to stay on top of hours creep--when an employee works more hours than anticipated--to keep from exceeding the number of full time employees which could trigger the requirements
Other changes for 2014 include employer’s ability to offer health and wellness rewards to employees. This could mean that employees that take part in employer sponsored wellness programs could receive discounts of up to 20 percent on premiums, which could increase to as much as 50 percent in the future. It is hoped that by participating, employees will improve their overall health and that in turn will reduce the costs of healthcare to the group.
Because there will no longer be any pre-existing condition restrictions on coverage, employers will pay a Transitional Reinsurance Fee to the federal government each year, estimated to be $63 per employee, Minton said.
“If a claim then exceeds a set amount, say $250,000, and could jeopardize the employer’s plan, the excess can be covered through reinsurance from a pool paid into by all employers throughout the nation,” he said.
Minton said he expects more answers will become available for small employers as the nation moves closer to the October 1 deadline for exchange availability.