Preparing for the Affordable Care Act, and 'the new norm'
Even before her hour-long presentation at the Do it Best May Market on the Affordable Care Act (ACA), Annette Bechtold was questioned about its potential impact on hardware retailers.
It happens all the time to Bechtold, senior VP regulatory affairs and reform initiatives for Digital Insurance.
"I laugh when I'm told 'you have an hour,'" Bechtold said about her presentation, "Preparing for Health Care Reform in 2014, What Employees Need to Know." "We could spend a day on it."
That's because the implications of the 2014 ACA requirements are as immense as they are complicated — so much so that many business owners have trouble wrapping their heads around it.
Bechtold said the industry — not just home improvement stores — has preferred to ignore ACA rather than prepare for what she called "the new norm." She noted, "A lot of employers have been asleep on this issue, hoping it would just go away. Recent statistics show the majority of employers haven't adequately prepared to meet the requirements, and less than 40% have developed a clear strategy for implementation."
Some key terms businesses should be familiar with:
Affordable Insurance Exchange
Also known as the health insurance "Marketplace," the Affordable Insurance Exchange is a new transparent, competitive insurance marketplace where individuals and small businesses can purchase affordable and qualified health benefit plans. The Marketplace for small employers, known as the Small Business Health Options Program (SHOP), and the Individual Marketplace for consumers and those who are self-employed, will open in all states Jan. 1, 2014. Enrollment begins Oct. 1, 2013.
Employer Shared Responsibility
Employers of a certain size will be subject to the Employer Shared Responsibility provision of the law. Beginning in 2014, business owners with at least 50 full-time or full-time equivalent (FTE) employees that do not offer health coverage to their full-time employees may be subject to a shared responsibility payment (i.e., fine) under the healthcare law.
Bechtold said that while many hardware stores staff fewer than 50 FTEs, owners should be aware of the calculation methods used. An FTE provides 30 hours or more of weekly service, or 130 hours if using a monthly standard. For example, if a company hires 38 full-timers and 25 part-timers who work 12 to 24 hours per week, the equivalent FTE calculation over a 12-month period would be 50.1, putting the company in a large employer class, and thus subject to the Employer Shared Responsibility provision.
Small Business Health Care Tax Credits
The ACA offers tax credits for eligible small businesses that choose to provide insurance to their employees for the first time, or maintain the coverage they already have. To qualify for a small business healthcare tax credit of up to 35%, a business must have fewer than 25 FTEs, pay average annual wages below $50,000, and contribute 50% or more toward employees' self-only health insurance premiums. In 2014, this tax credit goes up to 50% and is available to qualified small businesses that purchase coverage in the SHOP Marketplace.
Another tricky issue is that of "variable hour employees," Bechtold told the Do it Best group. Under the new guidance, an employee is considered variable-hour if, at date of hire, it cannot be determined that the employee would be expected to work at least 30 hours per week on average. An example would be a retail employee hired to work full time during the holiday season, but who is reasonably expected to work only part time (less than 30 hours) afterwards. "It can be a big dilemma if you don't know how many hours they will work in a given year," Bechtold said.
She noted that while smaller employers are exempt from the health insurance mandate, some might still want to offer coverage to be competitive in the marketplace and to attract and retain talent.
Bob Taylor, CEO of Do It Best, had mixed emotions about the strong showing at Bechtold's session. "I'm glad we're able to provide that resource, and I'm glad that members saw it as an informational opportunity," he said. "But, the reality is, that's not a session that we should have to be presenting. It's unfortunate that that's a distraction from so many members' businesses and an opportunity to increase their profits, and they have to be distracted by that."