Since it was recently debated by President Obama and Governor Romney, the Patient Protection and Affordable Care (PPACA) may have the appearance that it is still in political limbo and a bit further down the road than it actually is.
The reality, however, is that employers are already being affected by PPACA provisions and need to start making decisions for 2014 compliance. Even if Governor Romney wins, repeal may not happen quickly, or at all, especially if the Senate remains controlled by Democrats.
The small business community in Washington D.C., is a strong example of a group of employers already impacted by PPACA provisions.
Come 2014, Washington small businesses with 50 or fewer employees will be required to buy employee health plans through a city-run exchange.
The rationale behind the District’s mandate is largely due to the fact that D.C.’s individual insurance market is too small to have a public exchange and needs to include small businesses for it to be viable.
According to Neil Simons of Independent Benefit Services, a firm that’s a member of my group — United Benefit Advisors — the biggest issue with D.C.’s recent mandate is the detrimental economic impact facing small businesses that will have to say goodbye to the wide variety of health plans that cater to small group employers’ unique budget needs.
Instead, they will have to accept the Exchange’s standardized plans, which may prove to be more expensive.
With a 2014 implementation deadline looming, small business may not have time to adjust for this potentially increased budget item.
The Exchange also will not allow small employers to have the access to grandfathered plans that is afforded to larger groups and individuals.
At renewal time, small group employers are again left with less choices , counter to PPACA’s initial promise that if small group employers like their health plans they would be able to keep them.
Simons also highlighted the risky nature of switching all small business health plan purchases to a brand new, untested Exchange: There is no transition pilot program or beta test to determine if it will provide the anticipated cost savings.
It’s also not clear if all small employers will have to start making Exchange health plan purchase in 2014 or if there will be a phased approach to this mandate.
Additionally, because the Exchange is funded by tax dollars, there could be disruptive funding cuts in the future that upend the intended efforts.
Setting aside potential budget cuts, the Exchange, quite simply, may not end up being as much of a cost-saving as anticipated. If the Exchange fails, making the transition back to the traditional health plan purchasing marketplace would bring a myriad of logistical challenges.
The District’s small businesses aren’t the only employers currently affected by PPACA provisions.
In fact, all employers should already be taking measure to comply with PPACA. Here is an executive summary of a PPACA compliance report that lists the kinds of questions employers must answer and actions employers must take to get ready for 2014.
UBA member firms are offering clients separate guides aimed at employers with fewer than 50 employees, those with 50 to 100 employees, and those with more than 100 employees.
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