The Affordable Care Act, also known as “Obamacare,” goes into effect on New Year’s Day. Although the administration recently pushed back the deadline for larger companies to provide health care coverage to their employees by a year, to Jan. 1, 2015, the clock is ticking.
Because it can be challenging for any business to comply with such landmark — and labyrinthine — legislation, Build recently asked two midmarket leaders how they plan to address the new laws. Here’s what Joy Gendusa, CEO of PostcardMania, a $20 million, 200-employee direct-marketing company, and Trish Burr, vice president of operations at BlackLine Systems, a $25 million, enterprise-class financial SaaS provider, had to say.
Q: Are your HR people on the case?
Gendusa: Yes, [they’re] trying to get the data.
Burr: Yes, the Affordable Care Act is definitely on our radar. But through seminars and webinars on the topic, in addition to regular updates from our broker, the Affordable Care Act has had minimal impact on our benefit policy administration. That being said, the changes are confusing. Even some of the “experts” have trouble explaining the new provisions. We feel as well informed on the subject as can be with the information that’s out there, but [we] want to be sure we understand fully before making changes to our existing employee benefit policies.
Q: What, specifically, is the most important thing you need to learn?
Gendusa: Well, first off, the “year off” issue: If we follow the announcement and not worry about it until 2014, it seems we will be breaking the law. So, what is the truth?
Burr: Overall, the issue for employers will be finding a way to manage the skyrocketing costs, so we can afford to continue to offer quality health insurance to all employees.
Q: Have you come up with any cost estimates that you can share?
Gendusa: Not yet. We’ve asked our insurance agent to put it all together for us, but we are still waiting for the analysis.
Burr: Currently, in a large group plan, rates are standardized and averaged among all employees and primarily based upon prior health history. Insurance companies are now putting in place a framework whereby if employees — and companies by default — do not participate in a wellness program, those employees themselves could individually pay higher rates than those that do, potentially setting a precedent for individual rates within large group plans. So, down the line, rates could essentially become individualized and be based on predicted, but not yet confirmed, future health issues.
Q: What’s been the most frustrating aspect of this for you?
Gendusa: Just not knowing. Will I really have to put a slew of staff on 30 hours? The media is making it more challenging, because I can’t believe what I hear.
Burr: The biggest concerns we have at BlackLine are the proposed cost increases and how to best manage them. Insurance premiums are skyrocketing — expected to go up by as much as 30 percent annually in some cases.
Still feeling confused? Fear not. As we mentioned in the headline, one new regulation is quite easy to comprehend. It’s called the 30/130 rule.
“It’s the provision that says employees with more than 30 hours of service per week or 130 hours of service per month must be offered health care benefits,” writes Sharlyn Lauby (@sharlyn_lauby), author of the HR Bartender blog, in the post “The Human Resources Guide to the Affordable Care Act.”
Mind you: This rule pertains only to companies with 50 or more employees, writes Philip Moeller (@PhilMoeller) on U.S. News & World Report’s Money blog. Businesses with fewer staffers are exempt (see The Plus below).
The 30/130 rule is a reason that companies like Kronos, which sponsored Lauby’s post, have skin in the Obamacare game. Kronos and other makers of workforce management software, such as ADP and McKesson, are inherently interested in helping companies track compliance. They’re even offering some free, useful resources to help execs make sense of the legislation. Of course, those resources come with the typical caveat: Beware of the sales pitches.
Like so much of the corporate world, Obamacare is a numbers game. Here are two more key figures — thanks to Moeller’s U.S. News post — to help you understand the new laws:
50: If your company has fewer than 50 employees, it is not required to offer health insurance. “Employees will presumably get individual coverage directly from private insurers or from the new state insurance exchanges,” Moeller writes.
9.5: “The law says employer-offered health insurance is not affordable if the cost to purchase coverage totals more than 9.5 percent of an employee’s wage income per a W-2 statement,” Moeller writes. “This test applies to even the lowest-paid qualifying employee. . . . Note that the test only applies to what it would cost the employee to get coverage only for himself or herself, not the coverage he or she would elect to buy as part of a family plan.”