For the first time, under the Patient Protection and Affordable Care Act, the government is offering a universal set of rules that defines what an employer’s health care plan must look like and who must be able to participate. New information is coming out daily, and the changes impact businesses in different ways.
The law mandates the maximum an employee can pay for this coverage, defining an “affordable rate” as an employee contribution of no more than 9.5 percent of household income. The question for our region’s employer groups is whether their employees are able to afford or see value in this new cost.
Will employees participate or pay the government individual fine, which is only $95 in year one? Will they ask to work fewer hours, making themselves ineligible for their employer programs but possibly eligible for government subsidies in the newly created federal exchanges? Will insurance companies waive participation requirements to allow employers to offer coverage to the employees who want it? And how will this additional employer cost impact the price of a meal, gallon of gas and overall cost of doing business in a competitive environment?
Employers have less than 200 days to become educated on all the rules around employer obligations. All industries need to pay particular attention to the issue of part-time and full-time employment, defined as 30 hours per week in order to be benefit eligible. The law’s requirement to offer coverage is mainly for companies with at least 50 full-time employees. However, some companies may be required to convert the number of part-time hours into full-time equivalents as they assess whether they have to comply with the law. The law also introduces a new category of worker, the variable hour or seasonal employee, who may work variable hours but still averages 30 hours per week over a given period.
Employers should seek to have a full understanding of their financial obligations in contemplating offering coverage, including differences between paying a penalty versus providing minimal coverage. It may be more expensive to opt-out of providing insurance and in addition, may cost you quality employees.
Mark Fontenot, Employee Benefit Specialist, HUB International Gulf South
About HUB International Gulf South
HUB International is a leading national full service insurance consulting and brokerage firm that provides a broad array of employee benefits resources, life and health, reinsurance, investment, property & casualty, and risk management products and services. Regionally, HUB has 11 offices throughout Mississippi, Alabama and Louisiana. Locally, HUB offers personal service, individual attention and has the ability to respond quickly to your changing needs. Nationally, the hubs are a knowledge powerhouse providing you with tailor-made solutions that are designed by drawing upon our combined skills and expertise. Our national resources and local relationships have made us one of the largest employee benefit consulting firms in the Gulf South. To learn more about HUB, visit our website: www.hubinternational.com