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Friday, November 22, 2013

Obamacare Scorecard

By Tommy Eden

This last week the Department of  Health and Human Services (HHS) released its most detailed reports to date showing the results of the first period of open enrollment in the Health Insurance Marketplace. As of November 13, 2013, Obamacare scored a total of only 106,185 individuals enrolled through the exchange while more than 4.8 million Americans received notices that their preexisting plans will be cancelled. So far, the scorecard doesn’t look very good for Obamacare and the number of cancellations notices continue to skyrocket. 

Common Sense Counsel:
What action should every small employer (under 50 employees) take now?
Consider these 3 Steps:

Step 1: “Strategically” decide to “Go or Stay Small”
·                    Applicable Large Employers who have 50 FTEs must offer health coverage to all full-time employees or face pay or play fines.
·                    Must correctly identify the "employer group" to correctly apply the rules (i.e., "who is the Employer" - IRS control group rules apply)
·                    Go small by:
ü      contracting out distinct business functions (SWOT analyses)
ü      use Staffing Service
ü      breakup controlled group (within IRS Attribution Rules)
ü      reduce size of workforce
ü      sell your business
ü      sell parts of your business
ü      use part-time and variable hourly employees (still may be Applicable Larger Employer but no fines)
ü      solicit wise counsel so what you do will truly make a difference

Step 2: Update your employee handbook
·                    Full-time for ObamaCare mandate is 30 hours a week
·                    Coverage not mandated for part-time, temporary, seasonal and variable hourly employees so must include in handbook new classification information and new hire packets.
·                    Carefully review staffing employee arrangements to determine impact
·                    Confirm that independent contractors are really IC's and not EE's as       improper classification can lead to big financial problems
·                    Legally crafted benefit disclaimer language in handbook and benefit plans is critical to allow quick pivots on benefit related issues
·                    Move benefits to separate explanation of benefits booklet and out of handbook as much is still undecided.

Step 3: Consider top 5 healthcare plan design choices for groups under 50
·                    Keep everything “as is”. Cover issues like “grandfather rules” and notices that still apply in Obamacare.
·                    Purchase group insurance through the SHOP (small Business Health Options Program) exchange to qualify for the IRS tax credit
·                    Change to a self insured group plan to avoid taxes (can go down to 10 participants)
·                    Terminate group plan but replace with a defined contribution plan amount for health expenses so employees qualify for Federal subsidies allowing employees to purchase custom-fit policies through the new private exchanges or Federal exchange (Best choice for most small employers)
·                    Terminate group plan and either keep the money or give a pay raise.

Tommy Eden is a partner working out of the Constangy, Brooks & Smith, LLP offices in Opelika, AL and West Point, GA and a member of the ABA Section of Labor and Employment Law and serves on the Board of Directors for the East Alabama SHRM Chapter. He can be contacted at or 334-246-2901. Blog at Information for the article also contributed by Alan Chappell of Chappell Consulting.