The start of 2015 marks the first year of enforcement of the Affordable Care Act’s (ACA) employer shared responsibility provision.
Many employers spent much of 2014 preparing to meet their obligations under the ACA.
While numerous guidelines were put forth in the previous year to educate employers on how to satisfy the law’s requirements, 2014 also served as an important learning opportunity.
“The task of meeting the employer mandate can be immense, but employers who spent 2014 focused on cutting corners or altogether denying the reality of the law ended up wasting time,” says Ron Filice, president and CEO at Filice Insurance.
“Various federal agencies came down hard on these strategies in 2014 and made it clear that enforcement of the law will move forward as planned.”
Smart Business spoke with Filice about where companies got off track in preparing for the ACA in 2014 and what their strategy should be going into 2015.
What is the status of the ACA’s employer shared responsibility provision?
Under the ACA’s employer mandate, applicable large employers (ALEs) that do not offer health coverage to their full-time employees (and dependent children) that is affordable and provides minimum value will be subject to penalties if any full-time employee receives a government subsidy for health coverage through an exchange.
These “pay or play” rules were set to take effect on Jan. 1, 2014. The IRS, however, delayed the employer penalty provisions and related reporting requirements for one year, until Jan. 1, 2015. In 2015, most employers with more than 100 employees will be required to offer health insurance or pay a tax penalty.
Eligible ALEs with fewer than 100 full-time employees have an additional year, until 2016, to comply with the shared responsibility rules.
What lessons can be learned going forward?
Some employers looked for strategies that required the least amount of commitment while still meeting the demands of the law.
For example, ‘skinny’ or ‘minimum-value’ plans were products that seemed to be the perfect solution, as these plans provided the bare minimum amount of coverage to employees, yet appeared to satisfy ACA requirements.
But the IRS and the Department of Labor swiftly came down on these plans and stated that they do not meet the standards contemplated by the ACA and will fail to satisfy the employer mandate.
The most detrimental strategy was for employers to deny the need to comply altogether. For a time, the political climate and rhetoric of 2014 encouraged this strategy. The now-Republican majority in Congress sparked speculation of an ACA repeal, or at the least, a major overhaul.
But the reality is that any change to existing law will not be seen for quite some time.
Additionally, the Supreme Court will hear arguments regarding the role of federally-established Marketplace Exchanges, which also fed the hopes of those who prefer the law to simply go away. A decision from the Supreme Court, however, is not only many months off, but is unlikely to result in the total unraveling of the employer mandate.
How should employers approach 2015?
For ALEs with at least 100 full-time employees, 2014 was all about the preparation — understanding the law’s requirements, reviewing options and getting a health plan in place.
In 2015, these same employers will need to shift focus to organization and the meticulous administration of the plan they do have in place.
A team of trusted benefit advisers and a competent payroll provider will prove extremely helpful to employers in this regard.
ALEs preparing for 2016 ACA compliance should recognize that while the process of implementing an ACA-compliant plan may pose significant challenges, the best way to accomplish the task is to face it head-on rather than to spend time searching for loopholes or hoping for a last-minute reprieve from the law’s mandate.
Employers should remain flexible, review upcoming requirements and react to changes as they come. ●
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