Health Care Reform: The Dust Has Settled, but Strategic Questions Remain

By John Scorza Jun 30, 2015
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LAS VEGAS—The Affordable Care Act (ACA) has been in effect for about five years now, and it’s here to stay. “There’s not an expectation of significant changes to the law,” said David Lindgren, compliance officer at Flexible Benefit Services Corp., during a June 30, 2015, concurrent session at the Society for Human Resource Management 2015 Annual Conference & Exposition. That will be the case as long as Barack Obama is president and Republicans control Congress, Lindgren said. And as time passes, it becomes more and more difficult to repeal an established law, he noted, adding, “Employers should remain under the status quo.”

Pieces of the law will continue to be rolled out through 2020, so there still are several strategic and tactical issues for employers to consider, Lindgren said. These include coping with the employer mandate, reporting requirements and upcoming “Cadillac tax.”

The employer mandate requires large employers to offer minimum essential coverage to full-time employees or risk penalties. It became effective in 2015 for employers with 100 or more employees. Beginning in 2016, employers with 50 or more employees will have to comply with the mandate. Lindgren identified the following strategic questions for employers regarding the employer mandate:

  • Are you a large employer for purposes of the employer mandate?
  • How are you tracking employee status?
  • Are you at risk of any penalties?
  • Do you need (or want) to take any action to eliminate or reduce penalties?
  • Are you making any changes to your workforce (such as eliminating workers), and are there potential legal ramifications for doing so?

Beginning in 2016, employers will face new reporting requirements under the ACA and be penalized if they fail to comply. Two types of reporting will be required—Section 6055 reporting and Section 6056 reporting. The reports will contain coverage information from 2015. Any employer (small or large) that offers employee coverage will be required to report under Section 6055 about who is covered under the plan. Large employers, including those that don’t offer coverage, will be required to report under Section 6056 about who was offered coverage and other information about coverage and costs. Lindgren said employers should consider the following questions regarding the upcoming reporting requirements:

  • Are you subject to any reporting requirements?
  • Are you familiar with the reporting forms and instructions?
  • Are you (and how are you) tracking data that needs to be reported?
  • Who will do the reporting? Will you outsource that function?

Starting in 2018, employers that provide high-cost health plans will be subject to the ACA’s Cadillac tax—a 40 percent excise tax on health coverage benefits exceeding an estimated $10,200 for single coverage and an estimated $27,500 for family coverage. Lindgren said strategic questions employers should consider relating to the Cadillac tax include:

  • If the Cadillac tax were in effect today, would you be subject to an excise tax?
  • Do you want to change your employee contribution structures (tiers, for example)?
  • Do you want to consider increasing out-of-pocket costs to employees to reduce the value of coverage?
  • Are you going to eliminate or change flexible savings account, health reimbursement arrangement or health savings account contributions or other benefits?

John Scorza is associate editor of HR Magazine.

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