In coming years, the business of providing health insurance as a workplace benefit could drastically change as various provisions of the federal Affordable Care Act take effect.
For decades, health insurance coverage in America typically has come from employers who provide it as part of an overall compensation package.
In 2011, the most recent year for which data were available, 54.7 percent of American workers had health insurance from an employer, according to a report issued in July by the Employment Benefit Research Institute. The study found that 22.4 percent of uninsured workers hadn’t been offered health benefits from their employers.
Proponents of the ACA have said it will help reduce the ranks of the uninsured. In October, public health insurance marketplaces, or exchanges, will open and individuals can buy health insurance – regardless whether their employers offer health insurance. By 2014, the ACA will require all Americans to hold “minimum essential coverage.”
The ACA has pushed back by a year the so-called “employer mandate,” which was to take effect in 2014 and would have required all businesses with more than 50 full-time equivalent workers to offer them health insurance or pay a penalty.
However, those whose business it is to advise businesses on the ACA say they are advising that the extra year is not a time to relax.
“The first thing I advise any business owner is: Don’t stick your head in the sand,” said Elizabeth Milito, senior executive counsel for the National Federation of Independent Business.
She noted that the rollout of the ACA appears to be fluid, with rules still being written and potential future legislation and executive actions that could alter the timetable for various provisions.
But she advised employers to be aware of what’s coming and to prepare for each provision and for questions from their workers.
“There is a lot of misinformation out there,” Milito said.
She has received calls from some businesses with questions from their staffs, based on a false belief that employers must provide all employees with free or low-cost health insurance.
“It’s kind of a whisper-down-the-line effect,” Milito said. “So when it gets down to the employees, they’ve gotten bad information, and then they bring their questions to the people they go to with any sort of benefits question.”
She said employers should educate themselves on the intricacies of the employer mandate. She noted that the rules for counting employees under the ACA are not the same as those in other federal or state labor laws.
She has heard from some business owners who have reduced their full-time headcount by shifting more workers to part time or redesignating them as “independent contractors.”
But Milito said the National Federation of Independent Business cautions against such tactics.
“Beware of workarounds,” she said. “They can be problematic. It’s not going to get you out of the requirements under the ACA, and it may get you into hot water with other government agencies.”
Some observers have wondered whether some employers will steer staffs into the exchanges and drop health insurance as a benefit. Employers will be required to provide workers with a notice regarding the opening of the exchanges by Oct. 1, Milito said.
But a recent survey by workplace issues consulting firm Challenger, Gray & Christmas found that 82 percent of companies surveyed will continue to offer health care coverage next year. And none of the human resources executives surveyed said their companies will drop health coverage when the individual mandate takes effect Jan. 1.
“Certainly, some companies will decide it is more economical to pay the penalties than provide health care,” John Challenger, CEO of Challenger, Gray & Christmas, said in a prepared statement. “But for those that have been offering coverage voluntarily for many years, it is unlikely that the new law will prompt them to suddenly stop.”
The reason, Challenger said, is obvious: Employer-sponsored health insurance coverage is a benefit used to retain workers.
“Companies that continue to offer health insurance in 2014 could have a clear recruiting advantage,” Challenger said. In coming years, the business of providing health insurance as a workplace benefit could drastically change as various provisions of the federal Affordable Care Act take effect.