For the past four years, state insurance regulators, carriers, individuals and advisors have been readying themselves for the Jan. 1, 2014, implementation date for certain key aspects of the Patient Protection and Affordable Care Act (PPACA).
At the beginning of July 2013, it was announced that the employer mandate portion of PPACA was being delayed until 2015. This employer mandate requires employers that employ 50 or more employees to provide insurance to all employees or face penalties. Namely, fines.
In preparing to meet the requirements of the employer mandate provision by the original 2014 deadline, employers had put a tremendous amount of time and energy studying the issue and adjusting their business plan accordingly. By bumping the employer mandate to 2015, here are a few additional adjustments employers and their benefits advisors are now going to have to address:
How does this change their employer benefit plan strategy?
How does this affect, modify, or alter their employee retention or requirement strategies as it relates to how benefits are valued or perceived to be valued by employees?
Does this change their workforce management plans and policies, especially with regards to employees who are “working less than 30 hours per week”?
Here are the options that an employer may consider, along with possible reactions from employers:
Option 1: Stay the course.
In my opinion, the vast majority of employers fit into this category.
Employers have being studying the provisions within the employer mandate and have developed their plans assuming these provision will be put into place. The delay does not, in my opinion, change their course. The employer understands that this provision is simply delayed, not repealed.
If an employer was planning to exit from providing benefits, this doesn’t change their course. The penalties written into the employer mandate provision are still expected to be in place as of 2015, making 2014 a transition year. Also, contributing to employer’s decision to stay the course is that the public exchanges are expected to be operational come January 1, 2014.
Therefore it is conceivable, without any additional clarifications, that employers can implement their exit strategy without having to pay any penalties in 2014 and then address the penalties in 2015.
Specific to the employee, there is an open question regarding subsidies: if the employer implements their exit strategy and the employee is driven to the individual exchange market, will there be funding available?
If an employer had implemented or is planning to implement workforce management rules that limits hours work to less than 30 hours, or if an employers has or is reducing their workforce to less than 50 employees, again, the delay will not change their direction since the provision is expected to be enforced one year later.
If an employer was planning to continue to provide benefits to employees, the delay in the implementation of the employer mandate, again, will not alter their strategy.
Pushing this provision out another year does not change the strategy. In fact, I would argue that if there are potential issues it is better to confront them now to move past them and not later.
Option 2 : Change direction.