Finally, the election is over. So is the uncertainty whether the Patient Protection and Affordable Care Act (ACA), better known as ObamaCare, is really going to be implemented.
For employers, the impact is huge. Whether your business is small, large, or somewhere in between, the ACA has provisions that apply to your company. Now that the uncertainty has been lifted, it's time for employers to focus on the many healthcare compliance obligations and their impact on the bottom line. Companies need to understand their healthcare obligations and opportunities. Working with their legal, human resource and financial advisers, a company should design a cost-effective healthcare program that is optimally aligned with its strategic objectives and financial capabilities. Some of the law's requirements are currently in place, and some will become effective in the coming months. The most significant changes begin in 2014.
Employer pay or play mandate: must provide health insurance to employees and their families or pay a fine of $2,000 per employee.
Employers with 50 or more full-time employees must provide minimum levels of subsidized group health insurance to their employees and their families on January 1, 2014. (Under the law, two 20 hour-per-week part-time employees equate to one full-time equivalent employee). Any company failing to provide this coverage will be subject to a penalty of $2,000 per full-time employee per year (although the first 30 employees are not included in the calculation of the penalty).
Some employers may decide to continue offering employer-sponsored health care plans to their employees. Others may decide it makes more financial sense to pay the statutory fine ($2,000 per employee) and send employees to the (yet to be formed) health insurance exchange to buy private health insurance. This is the most significant new requirement of the ACA.
Compliance could be a significant burden for many employers. With the January 1, 2014 deadline less than 14 months away, they should begin planning now by analyzing how the pay or play mandate will impact their budgets and bottom line, and by evaluating the strategic, financial and operational implications of each option.
Next up: what companies should know about healthcare compliance.
This article is for informational purposes only and is not intended to constitute legal advice. It is recommended that you contact your legal, financial and human resource professionals to advise you on your company's specific healthcare and tax matters.
U.S. Treasury Dept. Regulations require that you be informed that any advice contained in this article is not intended or written to be used, and cannot be used, either (i) to avoid penalties imposed under the Internal Revenue Code, or (ii) for promoting, marketing, or recommending to another party any tax related matter addressed herein.
© Copyright 2012 Law Office of Alan Lowenthal