It's been five years since the Patient Protection and Affordable Care Act (PPACA, also called Obamacare) was signed into law. Implementation has occurred in stages over the last few years, but many business owners still have questions about how the law will continue to affect them.
"There is still a fair amount of confusion and misunderstanding about the requirements of the PPACA, even among human resources professionals and benefits managers," says John Turner, the President and CEO of Corporate Synergies, a company that specializes in brokering and administering corporate benefits programs.
As more of the law's provisions are phased in, it's vital that you, as a business owner, understand the basics and take steps to ensure proper compliance - and help your employees make the most of the situation.
Employee Designation and Information Reporting
One of the requirements of the PPACA is that businesses with 50 or more full-time employees provide health insurance benefits. However, says Turner, this doesn't mean that you can just designate all of your employees as "part-time" in order to get around the requirement.
"If an employee works an average of 30 or more hours per week - or 130 hours per month - the individual is considered full-time," he says. "As a technical matter, if all employees work less than 30 hours a week, an employer can avoid penalties, but this is not a viable business approach for most business owners."
Turner warns that the PPACA requires hours tracking and information reporting so that the government can determine whether or not adequate health insurance is being offered to workers. Businesses with variable-hour employees, such as restaurants, hospitality, retail, and some health care agencies are most likely to feel the effects of the PPACA reporting requirements.
"The government recently released final forms and instructions explaining how information reporting will work," Turner says. He encourages business owners to become acquainted with the process, and start as soon as possible. "Even though the IRS information filing deadline is not until early 2016, employers should start now to track and gather their data."
Turner points to resources that can help business owners learn more about the employee designation and reporting requirements under the PPACA. "There are too many PPACA stipulations and implications that require expert guidance," he says. "Start with your employee benefits broker, who may have internal compliance teams and ERISA attorneys to help navigate the law. There are also resources such as PPACA webinars, conferences, articles and websites offering guidance to help with the transition."
Explaining the PPACA to Employees
The next challenge is explaining the PPACA to employees. New regulations mean that you might have to change the benefits program you offer, including encouraging some employees to look at health exchanges. The best thing you can do, according to Turner, is to begin the process of education as soon as possible.
"Design an employee education and communication strategy that not only explains the PPACA, but benefits in general," says Turner. He points to a study from Carnegie Mellon University that indicates that only 14 percent of employees understand the terms deductible, copay, out-of-pocket maximum and co-insurance. These are basic health insurance terms that employees need to understand before making decisions.
"Regardless of the PPACA, employers should educate their employees on how to best utilize their benefits," continues Turner. "Through a deeper understanding of how benefits work, employees will more readily adapt to plan design changes necessitated by the law."
Turner suggests learning about the PPACA, and designing benefits that are compliant, and that can be explained as offering convenient alternative care options. "Change the benefits plan design to make it more cost-effective for employees to seek care from their primary care physician or an urgent care facility," he says. He also recommends educating employees about how healthcare costs can be directly tied their use of benefits.
As your business transitions to the requirements of the PPACA, it's important to start as soon as possible - 2016 is just around the corner and will arrive sooner than you imagine. It's also important to educate your employees so that they are ready for the transition as well.
"Educated and engaged consumers understand their benefits and appreciate that the choices they make will directly impact their benefits costs and contributions," says Turner. "This knowledge and transparency translates into a financial savings for everyone."