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Thursday, October 9, 2014

ObamaCare: Top 5 steps every employer should consider now

By Tommy Eden, Constangy, Brooks & Smith, LLP

1) 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 fine.
Must correctly identify the "employer group" to correctly apply the rules (i.e., "who is the Employer" - IRS controlled group rules apply)
Go small by:
ü      contracting out distinct business functions (SWOT analyses)
ü      use Staffing Service
ü      break-up 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

2) Step 2: Count the Cost
show NFIB online calculator
explain with example
what is your number?
then evaluate whether to play or pay - nondeductible $2,000 penalty for all FTE's -30 vs. anticipated cost of providing plan (make reasonable assumptions about who will take the plan if offered and how much cost will increase -- i.e., will a significant number really take the plan if offered, or will participation stay relatively stable).

3) Step 3: 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 obtain handbook in job classification information in the new hire packets (look-back measurement periods)
carefully review leased employee arrangements
confirm that independent contractors are really IC's and not EE's as improper classification can lead to big problems
providing other benefits not mandated for traditional classification of full-time but must specify such in your handbook and also benefit proration
benefit disclaimer language critical to allow quick pivots on benefit related issues
move benefits to separate explanation of benefits booklet and out of handbook
sole authority to interpret benefits eligibility and “bad boy” disqualification language can be most helpful
Plan Design Choices for Groups Under 50

o                   Keep everything “as is”. Cover issues like “grandfather rules” and notices that still apply in ACA.
o                   Purchase group insurance through the SHOP Exchange to qualify for the company tax credit.
o                   Change to a self insured group plan to avoid taxes (can go down to 10 participants).
o                   Terminate group plan but replace with a defined contribution amount for health expenses so employees qualify for Federal subsidies through the Federal exchange.

4) Step 4: Give your employees a 2015 HSA
moving to consumer driven healthcare
health savings account highly favored as best way to keep loyal employees
Example HSABank information
use Q&A materials from website
monthly payroll contributions
IRS has over 40 medically accepted expense categories
use a visa charge card or pay with a check

5) Step 5: Adopt wellness plan
start with a smoke-free campus, store or shop
individual health risk assessments
individualized wellness plans
rewards can be participatory v. contingent
Challenge goals with reasonable design
carrot and stick approach with incentives and penalties; can be up to 30% of total cost and 50% for smokers with measurable ROI
App-based wellness tracking
written wellness plan covering privacy and compliance
know your alphabet: HIPAA, ADA, EEOC, GINA, DOL, IRS

6) Step 6: Contractually Protect your Business Another significant ACA issue for those who use staffing company employees, are recent ACA IRS interpretations that a Client employer must be able to prove that the staffing company employees were offered affordable health care coverage. For purposes of the pay-or-play mandate, when the client is the common law employer, an offer of coverage made by the temporary staffing firm "on behalf of" the client employer will be considered to be an offer of coverage by the client employer. For an offer of coverage to be "on behalf of" the client employer, the client employer must pay a higher fee to the temporary staffing firm for those employees who enroll in the temporary staffing firm's plan. For example, if the staffing contract provides for a flat fee per employee placement irrespective of whether the employee enrolls in the staffing company's coverage, the employer will not be considered to have made an offer of coverage. This could lead to exposure to the Client employer under the pay-or-play mandate's $2,000 per full-time employee "no coverage offered" penalty if more than 5% of its full-time employees (30% in 2015) are employed through the staffing agency.

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 with expanded Common Sense Counsel and follow on twitter tommyeden3