08/01/2012

The PPACA is underway… now what?

In a hotly-contested 5-4 ruling, the Supreme Court upheld the Patient Protection and Affordable Care Act — though from an unexpected direction: The Court rejected the Administration’s argument that the Commerce Clause allowed them to impose a penalty on individuals for not buying health insurance coverage. But according to Chief Justice Roberts’ governing opinion, the mandate was within Congress’s purview under its Constitutional authority to impose taxes.

While the law remains broadly unpopular with the American populace, the Supreme Court decision does bring some clarity to the issue: The Affordable Care Act is law, and will stand unless Congress repeals it.

What do employers need to do?

First, continue taking steps to ensure you are in compliance with the law’s provisions. Appoint an experienced manager to monitor the law and any regulatory changes, for example, and make adjustments to company policies and compliance documents.

Meanwhile, here are some specific things you can do now to help your company and employees navigate the post ACA environment:

• Implement or expand your communications efforts. Employees are waiting to hear from their company leadership on the future of their workplace benefits.
• Create a compliance calendar – and integrate it into your existing compliance calendars listing deadlines for other HR-related functions, such as pension plan filings and due dates for payroll and FUTA tax contributions.
• Provide coverage. The new law requires employers with 50 full-time employees or more to provide coverage, or pay a fine of $2,000 per employee – except for the first 30. This will increase the costs of hiring beyond 50 employees, of course, although the penalty amount is less than what it normally costs to provide health insurance coverage for an employee. However, if you have been on the cusp of expanding health insurance coverage to your employees, and you have more than 50 workers – or plan on adding them in the next few years – the decision will soon get $2,000 easier per worker.
• Consider setting up a new business entity. If you don’t think it’s realistic to offer benefits to all your workers, because of cost or competitive pressures, you may want to consider creating a new corporation or LLC that employs some of your workers. The idea is to get the number of full time workers below 50 in any given entity that does not offer coverage to all employees.
• Review plans that discriminate in favor of management. Specific regulations are still pending, but the law discourages companies from offering senior management significantly better health care access than the plans available to the rank and file. If you have different plans available to different classes of employees, you may have to pay substantial penalties, beginning in 2014.
• Set up automatic enrollment. This is generally a must for employees with over 200 workers under the ACA, but is still an option for smaller employers, too. Workers must be enrolled in your plan automatically. The default, made in the absence of a worker’s specific request, cannot be to assume the worker does not desire coverage. Instead, workers at these companies must specifically “opt out.”
• Limit FSAs. Beginning in 2013, the new law limits contributions to flexible spending accounts to $2,500 per year. Ensure your contribution tracking and accounting system and your plan documents reflect this change.
• Get ready for open enrollment period. Chances are you need to develop a new Summary of Benefits and Coverages – and have it ready for your next open enrollment period. Work closely with your agent to ensure your new SBC meets ACA requirements. This needs to get done now.

The PPACA is just getting underway. While most of the impact on the rank and file will not occur until 2014, when most of the plan provisions go into effect, you as employers need to plan many months ahead. The full effects of the legislation on employers will not be known until the Department of Health and Human Services issues the full set of regulations under the plan – and the election in November will have a lot to do with what those regulations look like, even if the law is not repealed.