The Affordable Care Act, also known as Obamacare, is one of the biggest revamps of our health care system in last 50 years since the introduction of Medicare and Medicaid in 1965. It changes the rules of health insurance coverage not only for businesses and insurers, but also for an estimated 20 million Americans. Since being signed into law four years ago, the details of the ACA have been trickling out to the masses. This year, however, marks the first phase of implementation.
The complexities of health care reform are difficult to navigate, but it’s important, particularly for those of us in the HR and staffing industries, to at least be well-versed on a few key areas. We’ve spent countless hours researching and following the latest provisions released on the ACA to do just that — we needed to do this not just for our own company, but to be an informed resource for our clients.
I break down some of the central points in this piece (meant to be informative and not a substitute for legal counsel), but consider first watching this six-minute video by the Kaiser Family Foundation. It is adeptly narrated by Charlie Gibson, former anchor of ABC’s “World News with Charlie Gibson,” and provides one of the better overviews of health care reform for every person. It will serve as good context for the information that follows.
Keeping Track of the Changes
As recently as February of this year, the IRS and Treasury Department updated the rules for implementing the employer “shared responsibility” provisions, also known as the “pay or play” mandate (all 227 pages worth). To understand pay or play, I thought Liz Moughan outlined it succinctly in a recent Talent Management.com piece:
- Play: Provide health care coverage for all employees who qualify as full-time under the ACA guidelines and elect to obtain coverage. In doing so, costs will probably rise, and finding a way to absorb these costs will not be easy.
- Pay: Choose to not provide coverage and elect to pay the government’s penalties for noncompliance. Companies choosing this strategy are at risk of employee and public backlash, which can result in anything from increased turnover to decreased employee productivity and morale to a negative impact on stock price.
Additionally, there are still no financial requirements for small businesses to contribute to their employees’ health insurance. Companies with 50 to 99 employees that do not yet provide affordable health insurance to their full-time employees (defined as working an average of 30 hours or more per week) will report on their workers and coverage in 2015, but have until 2016 before any employer responsibility payments could apply. Larger employers with 100 or more employees can phase-in the percentage of full-time workers that they need to offer coverage to, from 70 percent in 2015 to 95 percent in 2016 and beyond.
Ignoring It Won’t Make It Go Away
The objective of the ACA is to increase the affordability and rate of health insurance coverage and reduce the overall costs of health care for individuals and the government. It provides a number of mechanisms — including mandates, subsidies and tax credits — to employers and individuals to increase the coverage rate and health insurance affordability.
Because of its impact and influence on business, the ACA requires special attention when it comes to workforce planning. At this point in time, not only are employers still working through the technical aspects of the health care bill, but they are now focused on learning what others are doing and taking cues from industry leaders by identifying best practices and determining a course of action. Or they should be.
A recent survey by the Staffing Industry Analysts found that preparing for health care reform was actually a low priority for companies. In fact, 64 percent don’t know what short-term actions they will take, whether it is assignment limits, cost containment, more part-time workers, temporary workers or compliance, among others. Perhaps this is because the specifics and implementation of the ACA are still changing, which makes this moving target even more difficult to catch.
By seeking advice from the experts in your circles, business leaders can be proactive in their planning and internal communication to lessen the disruptive effects of the ACA.
When considering the sheer volume of people the ACA affects it is understandable that the level of detail can be overwhelming. Talent Management, as well as the American Staffing Association, are places to turn for advice and assistance on understanding the latest strategic workforce practices and nuances of the ACA — including the intention of the law, how it pertains to companies and the risks and considerations.
Subsequent posts on this blog will address small and large business strategies, staffing industry best practices and in more detail. What questions do you have? Please post them here and I’ll work to address them.