Health Care Reform is now a reality. Another reality is that some employer groups are very angry about it. Many employer groups are throwing up their hands in exasperation saying they would rather simply pay the fine. The fine introduced in the bill applies to companies of 50 or more full time employees (or the equivalent based on a calculation of part timers’ hours) and is applied for every employee that is not offered insurance (fine equals total number of employees minus 30 times $2,000). While some employer groups are looking at 2014 (the date the fine activates) saying we will simply cease our offering of insurance and pay the penalty, there is more to consider. Consider for example, simply purchasing a base plan and allowing the employees to “buy up” to more comprehensive plan offerings if they choose to. You would only need to pay for a portion of the base plan, and that money would still be tax sheltered—versus simply paying a huge fine at year end. In the case of the fine, the money is not a write off, and it goes to waste. In the case of buying a base plan, your company can write off the premium and continue to use benefits as a recruitment/retention tool. However, this multifaceted problem is less urgent than issues that may impact your group as early as June 1st.
The most urgent matter to consider is the addition of your employees’ children back onto plans regardless of student or marital status. Technically speaking, the bill itself calls for this addition to be made mandatory at your plan’s renewal beginning for plans that renew October 1, 2010. However, in an effort to get ahead of the curve, carriers are implementing their own pre-regulation responses.
Do you know how your carrier is handling the addition of 26 year old children? Some carriers are requiring action immediately—on or before June 1st of this year. Some carriers may add a 2% load to your rates. Some ancillary carriers (e.g. dental, vision, etc) are allowing over age dependents and others are not.
The over age dependents issue is absolutely one of the most pressing matters of the reform and because every carrier is different, it is vital that you speak with your insurance broker, or a broker whose information you trust and you find out exactly (based on your renewal date and your carriers) what you must do now, what can wait until later, and what you will need to prepare for at renewal.
Again, love it, hate it, indifferent to it, the reform bill is a reality, and because benefits are a big part of a company’s budget, it’s important to educate yourself on what pertains to your company specifically. It’s a long and complicated bill, but there are plenty of great avenues for further education.
Keep up to date as many of the changes phase in at different times over the next several years, and no one wants to miss out on tax benefits, or pay unnecessary fines.