Affordable Care Act requirements for businesses

Affordable Care Act requirements for businesses

UPDATE: On Feb. 10, 2014, the federal government announced yet another delay to the employer shared responsibility (“Play or Pay”) provisions of the Affordable Care Act. The two key points are as follows:

  • Businesses with 50-99 full-time (including full time-equivalent) employees must begin offering full-time employees qualified health coverage starting in 2016 (instead of 2015).
  • Businesses with 100 or more full-time (including full time-equivalent) employees are still required to offer qualified coverage starting in 2015 , but are now obligated to offer it to just 70 percent of full-time employees, instead of 95 percent. In 2016, that minimum percentage rises to 95 percent.

When government officials announced that they were once again delaying the Play or Pay provisions of health care reform, some business owners breathed a sigh of relief. But don’t get too comfortable.

Despite the delay, the Affordable Care act requirements are already affecting businesses. The sooner you prepare, the more likely you can avoid significant penalties or unexpected costs.

Here are the Affordable Care Act requirements your business could be facing:

For businesses with 50 or fewer full-time (including full-time equivalent) employees

These businesses are still affected by a number of health care reform provisions, including notifying employees about state exchanges. And most individuals are still required to have health coverage in place as of Jan. 1, 2014, or pay a penalty.

For businesses with 50 to 99 full-time (including full-time equivalent) employees

If you’re one of the “lucky ones” whose business is affected by the delay, you’ve got some time to make sure your business is prepared for 2016. To do so, make sure you have the systems and processes in place to track employee hours throughout 2015 for analysis of your “applicable large employer” status and responsibilities. And just like the smaller companies, you must provide state exchange notices to your employees.For businesses with 100 or more full-time (including full-time equivalent) employees

The employer mandate has not been delayed for these businesses. Your business should be tracking hours worked by all employees in 2014 for analysis of your “applicable large employer” status and responsibilities. All the pertinent data is being generated right now, so don’t wait. Moreover, you must also provide state exchange notices to your employees.

Determining the size of your business

Businesses with fluctuating numbers of seasonal and part-time workers (such as restaurant chains and large retailers) are especially having problems calculating their numbers of workers and determining which employer group they fall into for Play or Pay purposes.

And businesses teetering on the cusp of the 50-employee mark are questioning the financial and business consequences of reducing staff to simply avoid the problem.

The longer you wait, the more complicated (and costly) it gets.

Just because the employer mandate has been delayed for many companies, that doesn’t mean you should put decisions about health care reform on hold. Your procrastination could lead to significant penalties.

If you haven’t yet figured out whether you want to Play or Pay, do it now. Keep up with the announcements on health care reform. Survey your staff and talk to HR about how it might affect your employee retention rates. You might also want to talk to industry associations and peers about what they’ve decided to do.

Take the extra time to figure out what your real staffing needs are and hire accordingly. Depending on your company size, the delay gives you another year to recover from the recession without worrying about penalties. Go ahead and staff your company according to business needs, not whether it will subject you to Play or Pay rules.

If you’re thinking about offering benefits, don’t wait until the last minute. Do it now. Health care costs are expected to continue to climb due to new costs, taxes and fees, as well as adjusted community rating.

The closer it gets to 2015, the less time you’ll have to negotiate a good deal with a health insurance carrier. The sooner you can secure health benefits, the better.

The bottom line? Don’t wait, even if you can. Even if you have been given extra time to assess the best choice for your business, you still need to move quickly. And the sooner you decide whether to Play or Pay, the sooner you can focus on other business priorities.

Find out how Insperity can help you with this and other aspects of health care reform.

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