When President Obama signed the Patient Protection and Affordable Care Act (PPACA) into law nearly six years ago, he initiated one of the biggest overhauls to the U.S. health care system in history. Initially, this overhaul required little of employers. In fact, it included benefits, such as tax credits for small businesses. More difficult requirements eventually started kicking in, however. First, small inconveniences included a mandate to distribute health insurance exchange notices to employees or reduce waiting periods to no more than 90 days. Gradually, changes were implemented that had more costly impacts on employers.
That brings us to today. At this point, small to medium-sized businesses are juggling an array of new compliance and regulation mandates. From the PACE act to the health care W-2 and substantial liability for not offering coverage, employers now have a lot of reasons to remain current with increasingly broad requirements. Following are three that are causing some of the most confusion and cost.
Protecting Affordable Coverage for Employees (P.A.C.E.)
With the Rise of AI, What IP Disputes in Healthcare Are Likely to Emerge?
Munck Wilson Mandala Partner Greg Howison shared his perspective on some of the legal ramifications around AI, IP, connected devices and the data they generate, in response to emailed questions.
The PACE act (bi-partisan legislation that passed in October 2015) changed the definition of a small employer under the PPACA. Originally defined as any company with less than 50 employees, the ACA redefined a small business to include any company with up to 100 employees. PACE allowed states to determine which definition of a small business applied, under the condition that the CMS was notified before 2016 open enrollment.
Further, the legislation impacted how rates are set in the insurance market. In states that stuck with the “100 employees or less” definition of small employer, many small businesses will see hikes in premiums and shortages in coverage.
Employer Penalties
Employers who didn’t adhere to ACA requirements in 2015 will feel the wrath when they file their taxes in the coming months. Penalties will fall on employers with more than 50 full-time equivalent employees, unless they offer a qualified health coverage plan. The plan must be both “good enough” and “cheap enough,” or the employer faces a $2,000 fee on each employee over a certain threshold. Companies that previously didn’t include health coverage as part of their benefits package are being forced to change for a high price.
A Personalized Approach to Medication Nonadherence
At the Abarca Forward conference earlier this year, George Van Antwerp, managing director at Deloitte, discussed how social determinants of health and a personalized member experience can improve medication adherence and health outcomes.
Employers are also no longer able to offer a reimbursement for individual health premiums as an alternative to a group health plan. The IRS implemented a penalty of up to $36,500 per year per worker for small employers who use this approach to cut costs.
The Health Care W-2
Both employers and employees are by now very familiar with the W-2, an IRS form that ensures the accurate reporting of compensation for federal tax purposes. Now that the government requires employers to offer health insurance plans, the IRS has an additional form that ensures the accurate reporting of health coverage, the 1095-C. All employers who have more than 50 employees must distribute the form, which contains information on the coverage the employee signed up for during each month of the year.
Because of the complexity of the form and the comprehensive nature of the information, employers are restructuring HR systems so that benefits and payroll information is streamlined. Until new processes are in place, many employers will struggle to account for all full-time equivalent employees and their dependents on a variety of plans across the entire year.
In addition to the costly impact that the PPACA has on employers, the time and effort that must be devoted to compliance is likely to incite significant changes, especially for small businesses. Since the act’s implementation, the government has adjusted for unexpected obstacles by extending deadlines, amending sections of the legislation and addressing technological issues.
Even after six years of trial and error, however, it is difficult to predict how all of this will play out in the years ahead. The recent death of Supreme Court Justice Antonin Scalia leaves important health care cases on the docket unresolved. New requirements and exemptions continue to be enacted and repealed, and in light of the upcoming presidential election, it’s anyone’s guess as to how the PPACA will unfold in the next few years.
Photo: Flickr user Danie van der Merwe
