HR and the Affordable Care Act — Know the Facts
The Affordable Care Act is six years old and for small businesses in particular, it continues to challenge the Human Resource administrators who oversee their company’s healthcare benefits.
The landmark legislation, passed in 2010, phased in coverage and reporting requirements, first for large businesses, then adding small and smaller businesses.
“One of the difficult things about the Affordable Care Act is that it’s gone through so many changes in the past years. It makes adapting to the law so much more difficult.” said Greg Brogan, managing agent at Brogan, Reed, Van Gorder & Associates, which provides health related legal, compliance and reporting services to its clients.
Even for businesses that offered comprehensive healthcare benefits prior to the Affordable Care Act, compliance with the Act and its related reporting requirements, was taxing. For small businesses, where an owner or a manager often handles HR as one of many tasks, dealing with the Act is even more challenging.
“There are still a majority of small businesses out of compliance with the legislation. The penalties are enormous. For non-compliance plans, its $100 per day per employee. A company with 15 or 20 employees could end up with a six figure fine and that’s even if they are offering their workers a good plan,” said Brogan. “The question is how hard the government is going to come down on those who haven’t dotted the i’s and crossed the t’s.”
The Affordable Care Act requires that most Americans have adequate health insurance and businesses with more than 50 employees offer their full-time employees and dependents affordable and comprehensive coverage. Another goal of the legislation was to reduce the nation’s overall healthcare spending.
To ensure that businesses fulfill the Act’s requirements, they are required to evaluate the pay and hours worked by employees and produce reports for the government and for the workforce detailing the benefit. All of this is affected by such factors as available private and public health insurance plans, subsidies, taxes, insurance exchanges and more.
“When you consider all of the new things that have to come from a compliance standpoint, the question is whether an HR department is robust enough to take on and learn all of the requirements,” said Michael Guess, vice president of sales at Shinberg Insurance. His company creates plans and provides services to help businesses with the Affordable Care Act.
For large companies, the Affordable Care Act is now an accepted part of the HR landscape.
At Emergent BioSolutions Inc., a company that employs over 1,000 workers, many of them at its Lansing production facilities, the Affordable Care Act has added additional administrative burdens and reporting requirements, according to Vice President, Compensation, Benefits & HRIS, Mary Comfort.
“For large companies that already offer comprehensive plans, where the programs met the legal requirements for delivering essential coverage, the Act was not as large of an issue,” Comfort said. “We have the resources in place to respond.”
For Emergent, there were very few plan design changes needed to meet the new standards.
“I think the benefits we offer are a stronger package than what someone could find if they went to the public exchanges,” Comfort said.
Because Emergent has mostly full-time positions, it avoids the difficult issue facing other businesses that must determine whether part-time and seasonal workers meet the threshold for healthcare coverage.
Undertaking this analysis and navigating the maze of rules and regulations associated with the Affordable Care Act and producing the internal and external reports is the HR niche filled by companies like Shinberg and Brogan, Reed, Van Gorder & Associates.
Brogan noted that businesses with 30 to 70 employees are likely to have an employee with HR training and awareness of changes in the law. But even then, and certainly for even smaller businesses, the entire process can be overwhelming and distracting to the core business.
He cited restaurants, which often have many part-time workers, as an example of businesses that struggle to adapt their operations to the Act, particularly the requirement that mandates healthcare based on an employee’s hours worked and wages.
Wages for the wait staff are often well below the minimum because their pay is supplemented by tips. But not all tips are reported, Brogan said, and hours may be difficult to calculate in a business where workers swap shifts or work unscheduled hours during busy times.
It is left to the owner or manager to untangle the wage and hour accounts and determine who meets the 30 hours a week threshold for benefits. He said similar problems exist in the retail and hospitality industries.
“There are probably thousands of employers who chose to stick their head in the sand or didn’t have the wherewithal to gather the data,” Brogan said.