The Affordable Care Act: A few months left to go
When we first discussed the impact of the Affordable Care Act and the future actions an employer should consider implementation was years away. Now it is a matter of months. And, ACA will impact both employer and employee.
Within the last month or so, the White House has unilaterally decided to delay application of the insurance-coverage mandate for employers for at least another year (until 2105, we assume). It appears that (for the moment) an employer that fails to provide health insurance coverage for all full-time employees (if they have with 50 or more full-time employees will not yet incur a tax penalty for such lack-of-coverage until 2015. This temporary reprieve seems like good news, especially for smaller companies, but most executives and owners we speak with continue to plan and act as if that penalty is still due and payable in 2014. We believe this caution is a good course of action and generally a prudent use of 2014 to gain experience and monitor compliance.
On the other hand, the mandate for individuals to have health insurance who are not already (and adequately) covered or included in an employer-provided or other health insurance plan remains in place. Hence if an individual does not have health insurance in 2014, a penalty (assessed as a federal tax through the IRS) will be charged for all uncovered family members. These penalties will increase after 2014. This risk of penalty is particularly an issue with part-time employees. Of course, many uncovered employees may be eligible for governmental benefits to offset the cost of buying insurance—however sourced. Plus, there are a fistful of exemptions where penalties are not incurred.
It is likely that the majority of uncovered employees will be able to find low-cost or subsidized coverage or be exempted from the mandated penalties. But, some will incur this liability and the mere threat of this 2014 penalty is real to many part-timers.
For generations, employers have taken a lead role in providing health-care insurance to their employees through private or risk-pool insurance arrangements. As such, employees always have had an expectation that some health-care benefit might be provided. Sometimes it was, other times it was not (often in the case of part-time workers), but it was always a consideration in any employment arrangement. With ACA the federal government has forcefully put itself into the “deal” between the employer and employee. However, the relationship between employer and employees still remains strong and is primary.
Hence, we believe that it remains the employer’s responsibility to communicate with all employees (full- or part-time) regarding ACA and explain to each and all how it will affect them in the coming year. While some would say that it is the government’s job to do so, we all know this will not happen—other than a statement or two from the White House press room.
The ACA compliance landscape seems to be changing daily, and few can predict what will happen next. With regard to ACA compliance and penalties, we advise our readers to contact their tax advisor promptly and before year end for direction and advice.
But, your employees’ well-being and peace-of-mind are too important to be left to the agendas of a few politicians or bureaucrats. Make sure you inform and calm their ACA concerns directly and in person.
It is in your interest to do so. Arm yourself with the facts, and open an ACA dialogue with your employees. If you are waiting for the “final word” on ACA before you talk with employees, you may have a long wait. Reach out to your employees sooner than later.
Wilkening & Company has written a number of articles on the implications of ACA. If you go to our Search Our Site tool and type in “ACA.” It will link you to these previous articles. If we can help you navigate the through the requirements and implications of federal health-insurance legislation, or communicate change with you employees, do not hesitate to call or write.