How Does the ACA Affect Your Business?

BY LENORA REIDMAN AND JENNIFER WOLLMANN

The Affordable Care Act has a profound impact on society. This law not only affects businesses of all sizes, but also employees and their families. The ACA requires all individuals and their dependents to maintain minimum essential health care coverage either through their employer, an individual policy, a policy on the Exchange, or a government medical assistance program such as Medicare or Medicaid. People who do not carry coverage could be subject to a penalty when they file their individual tax return at the end of the year.

This has forced employers and employees to make difficult decisions when it comes to health care. Under the ACA, businesses that employ at least 50 full-time equivalent employees are mandated to offer medical insurance to all employees who work at least 30 hours per week. Businesses that employ fewer than 50 fulltime equivalent employees are not required to offer medical insurance to their employees.

For years, businesses have chosen group medical insurance as a means of attracting new talent and retaining it. In the past, employees were unable to secure individual policies if pre-existing conditions were present. Medical insurance is now accessible to everyone, regardless of their health status. The premiums are now solely based on an individual’s age, where they reside and whether or not they are tobacco users. All around, individuals are paying more for medical expenses. Premiums have skyrocketed and deductibles have increased drastically.

Employers need to think differently when determining the best health insurance plan for their staffs. It is important to look at the group demographics when determining whether to offer a traditional plan versus a high-deductible plan. While traditional plans offer lower deductibles and faster first dollar coverage, the premiums are usually more expensive.

In comparison, a high-deductible health plan might offer lower premiums, but the out-of-pocket costs associated with these plans are often higher. A health savings account can be established with a high-deductible health plan to assist in managing these out-of-pocket costs. Regardless of what type of plan you offer, employers and employees should be more accountable when it comes to health care.

When a business decides to offer group medical insurance to their employees, the next hurdle is to determine the amount they wish to contribute to their premiums. An employer is required by law to pay at least 50 percent of the cost of a single plan. One challenge with nongrandfathered plans is that an employee’s premium is based on his or her age. As an example, a 30-year-old employee will have a different premium than a 50-year-old employee. Essentially, the cost you contribute toward an older employee’s medical insurance will be more than that of a younger employee. This can create feelings of inequity among employees.

The decision of whether or not to offer group medical insurance to employees is important and all businesses are forced to make it. Regardless of the decision an employer makes, it has become increasingly apparent that employees and employers alike must educate themselves on the implications of the ACA law. Organizations need to make many critical decisions to ensure they remain in compliance. PB

Lenora Reidman, Human Resources Manager lenora@fpspayroll.com

Jennifer Wollmann, Sales and Account Management Fronteer Payroll Services Bismarck, N.D. jen@fpspayroll.com