The implementation of the Affordable Care Act (“ObamaCare”) is imposing many new burdens on employers. The provision of ObamaCare with the greatest impact on employers is the Employer Mandate. This provision requires employers with 50 employees or more to offer health coverage to all full-time employees or pay a fine. Originally scheduled to be effective on January 1, 2014, the Obama administration announced on July 2, 2013 that the effective date will be delayed one year, to January 1, 2015.
While the effective date of the Employer Mandate has been delayed, as of this writing two other important provisions of the law are still on schedule to take effect on October 1, 2013 and January 1, 2014, respectively. The Health Insurance Exchanges are still required to be up and running by October 1, 2013, and all employers (regardless of size) are required to issue to their employees a written Notice to Employees of Coverage Options (the “Coverage Options Notice”) by October 1, 2013. All employers, regardless of size, must provide the Coverage Options Notice to current employees no later than October 1 and to each new employee hired after October 1. The US DOL has a user-friendly form of Coverage Options Notice on its website at http://templatelab.com/FLSA-with-plans/.
The second provision of the law that has not (so far) been delayed is the Individual Mandate. Effective January 1, 2014, all individuals (with certain very limited exceptions) must purchase qualifying health insurance. Individuals buying plans on the Health Insurance Exchanges will be able to choose between four levels of coverage: platinum, gold, silver and bronze. Platinum plans will carry the highest premiums but offer the lowest out-of-pocket expenses. At the other end of the spectrum are bronze plans, which will have the lowest monthly premiums but higher deductibles and co-payments. Starting in 2014, all Americans will be required to carry health coverage or face fines. The fines start at $95 per adult or 1% of adjusted family income, whichever is greater, and escalate in later years. The fines will be collected through the filing of the individual’s tax return. People with annual income of up to 400% of the poverty line — or roughly $45,000 for an individual and about $92,000 for a family of four — will get federal subsidies to help defray the premium costs.
While perhaps not obvious at first blush, the Individual Mandate may raise some issues for employers. First, employees may seek more information about the coverage offered by the employer. HR professionals should be prepared to answer questions about the Individual Mandate and the Exchanges. Second, the Individual Mandate may increase participation in your health plan if you already offer insurance. Employers should consult with their health benefits advisors about whether or how this will impact your plan design and total health care costs.
The recent announcement that the Employer Mandate will be delayed until January 1, 2015 gives employers with more than 50 employees (and employers approaching 50 employees) more time to develop a strategy to comply with the ACA’s requirements. Employers need to work with their benefits advisors and their attorneys to analyze the various factors specific to their workforce. Employers would be well advised to take advantage of this extra time to learn as much as possible about the requirements and to consult with their professional advisors well ahead of the January 1, 2015 deadline.