Experts say employers should use health care extension to plan

By Liz Segrist
Published Aug. 19, 2013

Businesses with 50 or more employees now have until Jan. 1, 2015, to provide health care coverage for their workers before facing fines.

On July 1, President Barack Obama’s administration announced the extension from the previous deadline of Jan. 1, 2014, in part because the administration has yet to issue final regulations in enough time for employers to comply.

The provision affects about 4% of employers with more than 50 workers, as the large majority of companies already offer coverage, White House Press Secretary Jay Carney said in a statement.

Bobby Pearce, an employment attorney with Smith, Moore & Leatherwood in Charleston
Bobby Pearce, a business attorney with Smith Moore Leatherwood in Charleston
“Employers should use this as an opportunity,” said Christine Gantt-Sorenson, an employment attorney with Haynsworth Sinkler Boyd in Greenville. “This gives them an extra year to truly evaluate their employees and plan for the changes.”

Employers are trying to figure out to whom they have to offer health insurance that they didn’t previously, Gantt-Sorenson said. Employers can use the extension to define full-time and part-time employees, which will determine how many employees will require coverage as of the new deadline, she said.

The health care act states that any employee who works an average of 30 hours or more is considered full-time and must be offered benefits. Many employers treat 37 or fewer hours as part time. Insurance companies often define part time as 32 hours or less.

“A 32-hour employee previously considered part time will be now be considered full time and require coverage,” Gantt-Sorenson said. “The delay gives businesses a little more time to strategize about the best plans for them and analyze variable-hour employees.”

Bobby Pearce, a business attorney with Smith Moore Leatherwood LLP in Charleston, said this law is leading to an enormous increase in the hiring of part-time employees.

“Two part-timers are getting hired rather than one full-timer,” said Pearce, declining to name specific companies, but noting that hospitality, tourism and restaurant businesses will likely see this trend the most.

Employers can implement policies that keep part-time employees to less than 30 hours a week, Gantt-Sorenson said.

“I am not proposing taking benefits away from someone,” Gantt-Sorenson said. “I am proposing that employers look carefully at their employees’ hours to make sure that they are not inadvertently including part-time employees in coverage that the employer never expected to provide and the employee never expected to receive.”

The delay gives business owners more time to plan and analyze costs, said Nick Boeschen, an insurance associate with Anderson Insurance Agents in Charleston.

Boeschen said that some of the companies he’s worked with plan to stop offering health insurance altogether because of costs, but that the majority will continue because insurance is often seen as a competitive advantage when recruiting employees.

“For small employers especially, they should take this time to review and analyze their benefits offered versus the costs,” Boeschen said. “If it makes financial sense and keeps valuable employees, offer them benefits and help others find an alternative if they want one.”

For insurance providers, Boeschen said the extension provides time to examine new ways of approaching benefits. For example, he expects some smaller companies to beef up their benefits to stand out.

Wellness plans are one offering companies could look into. The Affordable Care Act will require wellness programs for larger companies, and Boeschen expects smaller companies to also add the programs to better control costs.

In that vein, beginning next year, the federal government is offering $2 million in grants for employers with fewer than 100 employees that set up wellness programs. No other details about the grants are available at this time.

Businesses’ concerns

Following the announcement of the delay of the employer mandate, the National Federation of Independent Business’ Federal Public Policy Director Amanda Austin said temporary relief isn’t enough and the burden will fall on those who create American jobs.

“The delay that they’ve just quietly announced is an incredible acknowledgment from the architects of this largely terrible health care act that they have failed and that businesses have no way to figure out how to comply,” Pearce said.

According to a White House statement, the Obama administration anticipated a certain degree of flexibility when working with states on the implementation of the Affordable Care Act.

“The decision to postpone implementation of this provision of the Affordable Care Act will have no significant impact on implementation overall of the Affordable Care Act,” Carney said.

Reach Liz Segrist at 843-849-3119.

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