Thursday, November 13, 2014YOUNGSTOWN, Ohio -- The reactions range from caution to confusion among companies as they prepare for the new rules and regulations that take effect next year under the Affordable Care Act, say area insurance brokers who deal mostly with corporate clients.
“The mandates are a mess on the employers,” says Brad White, CEO of the Tartan Companies, Boardman. “Regulations are the biggest issue right now and it’s all about trying to stay compliant.”
White, Bob Gearhart Jr. of DC Wellness, Dan Caparso at National Healthcare Access, and attorney George Millich Jr. of Harrington, Hoppe & Mitchell Ltd. in Youngstown, say that one year after the ACA marketplaces opened to accept individual enrollment, mid-size and large companies are bracing for the morass of red tape and government mandates they expect to affect them.
By the close of 2015, companies with 100 or more employees will be required to provide benefits to at least 70% of full-time equivalent workers and cover 95% of those workers by 2016. Businesses that employ between 50 and 99 employees are mandated to provide health benefits by 2016, under the law.
“It’s kind of a work in progress all the time,” White says of the ACA. “There are so many changes in the law.”
White and his staff have spent hundreds of hours helping to prepare clients for ACA mandates and compliance, he says. Larger employers, for example, must determine who is eligible for benefits as a full-time equivalent employee, which could be burdensome to human resources specialists.
“There’s a lot of variations on whether you have seasonal employees and how you calculate that,” he says.
Some smaller businesses have opted to self-insure so they could avoid some of the costs and penalties associated with the ACA. “There’s a whole new marketplace opening up,” White says.
Smaller employers have developed plans that are minimal in value but comply with ACA guidelines, White says. However, once an employer offers a plan, its employees become ineligible for government subsidies in the exchanges.
Companies and insurance agents are especially frustrated because they see the law in a state of constant flux, White observes. “You have to prepare as it’s written today, but it could change.”
As an example, White says, earlier this year, Tartan conducted a seminar for its clients that included 32 PowerPoint slides on the Affordable Care Act. Six days later, the company conducted another seminar. “Of those 32 slides, 27 changed between those two seminars,” he says.
Even more changes are likely next year after Republicans take control of the U.S. Senate. “It’ll be streamlined, not repealed,” he says of the law.
Although it’s a year old, employers remain largely in the dark about how the Affordable Care Act will affect their businesses, observes Dan Caparso of National Healthcare Access, an employee-benefits consulting firm in Boardman. “At this point, reaction is very similar to last year: employers are more confused than ever,” he says.
Still, Caparso says many small businesses, aware of the intricacies and changes in the law, are taking advantage of the so-called “grandmother” clause. Under this provision, employers who renewed their plans by the Dec. 1, 2013, deadline can keep their plans and avoid implementing ACA mandates for a year.
Last June, the law changed again by providing employers with an extended deadline to renew their plans by this Dec. 1, which would enable businesses to keep their current health plans another two more years, Caparso notes. “It’ll be an increase, but a small increase and worth it for many to keep their plans until Dec. 1, 2016,” he advises.
Among the other major changes associated with the ACA is how a community rating is determined. Under the old system, rates were ascertained by an employee’s age, whether one was a smoker or nonsmoker and his overall health.
Since the ACA mandates that carriers insure those with pre-existing conditions, the overall health of the employee is no longer factored into an employer’s premium. “All they ask you is your age, ZIP code, whether you are a tobacco user, and the size of your family,” Caparso explains.
Under the new law, Caparso says, an employer would pay the same premium for a perfectly healthy 40-year-old male employee who is single, as he would for a very sick, obese 40-year-old single male with the same ZIP code.
In this case, the healthy person probably would have qualified for a better rate under the old system, while the unhealthy one would enjoy much lower premiums through the ACA, Caparso says.
“The insurance industry has undergone a complete makeover because of the Affordable Care Act,” Caparso states.
Other intricacies of the law are sometimes lost in the maze of regulations, observes George Millich Jr., an attorney at Harrington, Hoppe & Mitchell Ltd. in Youngstown.
“I’ve been busy drawing up summary plans for companies,” Millich says. “If there’s an audit, that’s one of the things they’ll ask for.”
Under the new law, 90% to 95% of small companies are required to have a summary plan of their health care package, a provision some businesses aren’t aware of. “You can face fines if you don’t have it,” Millich states.
These sorts of mandates are among the flurry of new regulations related to the law that, Millich says, have caused many companies to gripe about the level of compliance, such as identifying full-time or part-time employees, measuring periods, and other aspects of the law.
“It puts a lot of strain on the HR people,” he says.
Those businesses that failed to lock in by the December 2013 deadline to keep their old plans now face some tough questions this year, reports Bob Gearhart Jr., vice president of DC Wellness, Boardman. “Employers that got stung are scrambling to react, so it’s a different climate than last year.”
DC Wellness is a consulting firm that advises employers on the best health-care packages and plans for their employees, Gearhart notes.
One client, he relates, found that his small company’s health insurance rates would soar 65% under the mandates of the ACA. “So, he got rid of the group health plan and directed individuals to the exchanges,” he says, where they would be able to purchase insurance themselves.
In this case, the strategy worked, Gearhart says. “As an employer, they could not take on the 65% rise,” so the company increased employees’ compensation to allow them to buy insurance in the marketplace. Thus, the employees were potentially eligible for any government subsidies.
Gearhart says that companies need to be aware of all of their options, especially when it comes to such a complex, ever-changing law. “We focus on educating ourselves, the market and our clients,” he says.
Often, companies contact DC Wellness only after they’ve made a mistake, Gearhart adds. “We come into the meeting knowing we have to make the best of a bad situation.”
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Copyright 2014 The Business Journal, Youngstown, Ohio.
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