For starters, companies with fewer than 50 full-time equivalent employees – the majority of small businesses – are not required by the law to offer health insurance to employees. Still, attracting the best employees often requires offering much more than a hefty salary; benefits such as health insurance can make the difference when recruiting top candidates and building an elite team.
So, even if a company has fewer than 50 employees, many employers may still want to provide an employee health benefits program — and if so, that plan will have to be in harmony with the new rules under Obamacare. What are those new rules?
Here are some of the less-discussed provisions to know about:
By far the biggest impact of Obamacare on small group health plans is the new provision for age-based rates. Individuals are now charged differently according to their age; the younger you are, the less you pay. For example, a 23-year-old employee might be charged $275 per month while a 63-year-old employee is charged $825 for the same coverage.
Premiums for spouses and dependents are also age-based. Fortunately, though, certain carriers are now offering small group policies with composite rates in both the single and dependent categories.
Another potential stumbling block for small businesses is a shorter waiting period for employees to become eligible for health-care benefits. Employers can be fined if their waiting period for coverage is longer than 90 days.
In addition, Obamacare dusted off a rarely enforced, 40-year-old compliance requirement from the 1974 Employee Retirement Income Security Act, which requires employers to provide certain information to workers about their health and retirement accounts.
In a nutshell, the Labor Department, which enforces the law, now plans to audit employers to make sure health benefit plans are in complete compliance with requirements of ERISA. Employers who are not in compliance are subject to fines ranging from $110 a day to more than $1,000 a day. To step up Title I enforcement, the department has added 1,800 new auditors.
How do steer clear of these potential stumbling blocks?
Here are my top five suggestions for small businesses to help minimize Obamacare-related headaches:
Make sure that your new hire eligibility period is less than 90 days following the date of hiring. By making the eligibility date the first of the month following 60 days on the job, for example, you can avoid any risk of being fined. That’s a simple step every employer should take immediately.
Consider moving to a high-deductible plan using an employer-sponsored health reimbursement arrangement or health savings account. Not only will this minimize costs to the company, but it will also make employees more accountable and aware of the cost of their health care.
If possible, to simplify the administrative work for your human resources team and to increase the likelihood of obtaining composite rates from insurance carriers, place all of your employees in one health plan. In most cases, if you can get a composite rate from a carrier, it will not change during the year when you hire an older worker.
Make sure you’re complying with ERISA by asking your broker to create what’s known as a Wrap Plan Document and Summary Plan Description for all of your company’s benefit plans. These documents essentially outline participants’ and beneficiaries’ rights and obligations under your health plan.
Finally, to reduce health risks, cut costs and improve employee productivity in the long term, consider implementing a variety of annual or year-round wellness opportunities for your employees. These could include health classes, health coaching, wellness challenges, smoking cessation programs and “de-stressing” activities such as yoga classes. These programs can help you build a happier, healthier and more productive workforce.
Joseph Appelbaum is founder and president of Potomac Cos., an employee benefit brokerage and consulting firm based in Rockville.
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