A couple of months ago, I wrote an article regarding the Patient Protection and Affordable Care Act, trying to provide an overview of some of the many issues. It is a very complex matter and one that is not easily handled in a single column. It gets even more complex as the dynamics associated with the law, as well as the social and economic issues driving the legislation, continue to evolve.
As I previously stated, it depends on your situation as to how you may perceive the value or burden resulting from the law. Many people believed or hoped the law would be overturned in the courts, but that didn’t happen. Their next hope is pinned on the upcoming election.
As a person who has worked many years to support employers in maximizing benefits while minimizing costs, I am also a bit of a realist. Keeping sight of reality is the only way to advise your employer, clients or associates on what should be the appropriate options to consider. Otherwise, they might just as well make the decisions without your help.
So here is a piece of reality: PPACA is not going to be overturned or repealed. To some this may be throwing in the towel, but I believe the strength of the political center will re-assert itself and the election will not be a slam-dunk on repeal. Provisions of the existing bill will move ahead. As people learn about the bill’s provisions and those who are not in the political world trying to make electorate points begin to be heard, the support for repeal will continue to diminish.
The focus is becoming more about how to deal with matters and what the best strategy is going forward.
We still need the political leaders to make sound decisions, something with which our state legislators, along with others, seem to struggle. As an example, because of the hard line Lansing took on dealing with the exchange options under PPACA, tons of federal money was left on the table. Gov. Rick Snyder tried to push for a state exchange, which those in the know saw as the best opportunity for control and effective practices under PPACA. Now we have to settle for another option, assumed to be the State/Federal Exchange Partnership. The governor will have to get the filings in place by the November deadline.
Most people don’t know how the exchange is going to work, but this is not surprising because the operational aspects of the matter are not worked out or are changing as the days pass. Consequently, it is hard to plan. It is also very difficult to start the processes that will be instrumental for the principal “kick-off” of the bill in 2014.
Some provisions are already in play or will be on Jan. 1, 2013. Children under 26 can stay under their parent’s medical plan. Pre-existing conditions are no longer allowed as reason for plan exclusion, and limits to flexible spending accounts are set at $2,500. These are just a few of the changes, with many more to come.
The Jan. 1, 2014, changes will be the most critical, and for businesses one of the most important for which to plan. Even if you offer your employees medical benefits, a business needs to do some employee profiling. One of the critical pieces is knowing how many employees you have with one status or another. The critical status is those who are considered full time (working 30 hours per week on a regular basis) under the regulations.
Once you have done this, you will have taken the first step to know if you are subject to some penalties or if you are eligible for certain credits, and what happens if your employees seek medical coverage through an exchange. The dividing line is 50 full-time employees.
Don’t forget that some seasonal and part-time staff might be counted if they meet certain conditions. A second and perhaps more sensitive aspect of the regulations involve the “affordability” provisions. How much of the premium your employee pays for medical care is governed by regulations to determine if it is affordable. One rule is that the amount cannot be more than 9.5 percent of the employee’s household income. (There is variation with family size and income levels relative to poverty figures.) How you collect this information will be sensitive because it could easily involve non-employee income. An option may allow the employee to certify that the premium does not exceed the requirements based on household tax returns. These provisions are not defined as yet.
Your operational strategy regarding employee staffing should be discussed with your insurance agent or HR advisors. Be sure you consider business needs over a couple of years in order to get the best game plan in place.
That brings up another point for you to consider: Be sure your advisors focus on your people, not just getting you the best premium at the moment. With the changes that will come with PPACA, your advisors will need to be knowledgeable and be willing to take the time to work with you.
These new rules will clearly shape the role of agents and consultants as the exchanges come into operation. For those who are not willing to step up to these responsibilities, the relationship with their clients is likely to change. For businesses that plan well and others who welcome the role of advisor and even administrator, it may be a new opportunity.
Ardon L. Schambers is principal at P3HR Consulting & Services in Grand Rapids.