While it faces challenges in the Supreme Court and threats of repeal from newly elected Republican congressional leaders, the Affordable Care Act (ACA) is likely here to stay. In 2015, it’s probably best for contractors to proceed assuming health care reform will be a part of business for the foreseeable future. And, even if this embattled version of reform ultimately is repealed, it likely would have to be replaced by some other plan as simply returning the roughly 10 million Americans who have signed up for insurance under the ACA to uninsured status is an unlikely (and probably unwise) scenario.
Leveling the Playing Field
By now, most contractors are familiar with the basic tenets of the ACA, which was signed into law by President Barack Obama on March 23, 2010. The law created a marketplace for insurance plans offered by private companies. All of the plans present the same essential health benefits, with financial assistance for eligible individuals to help them pay the premiums.
Companies with fewer than 50 employees are not required to offer health plans to employees, but may choose to do so as a way of attracting and retaining talent. Even if your company doesn’t provide health insurance, your employees still are required to have it, thanks to the ACA’s individual mandate. Therefore, it makes sense to be aware of the options available to help your employees obtain a qualifying plan.
An unexpected benefit of the ACA for small businesses is the way it has leveled the playing field when competing for quality employees.
“Most small businesses want to offer insurance to their employees,” said James E. Brooks, spokesman for the U.S. Small Business Administration, South Florida District. “Before the ACA, small businesses often were faced with losing good people to larger firms because those firms could offer a better benefits package. But, now, small-business owners can find affordable health care policies for their employees that are just as good as those offered by larger firms.”
Brooks added that small businesses should remember they might not stay small forever.
“Many small businesses may know the law doesn’t affect them because they don’t have 50 employees, but most small businesses want to grow,” he said. “At some point, they’ll need to understand the law so they can include it in their strategic plans.”
Changes on the Table (and in the Air) for 2015
The ACA is still being phased in, and at least a few changes are expected in 2015.
The employer mandate, which takes effect this month, requires employers with 100 or more full-time employees to offer health coverage to at least 70 percent of their full-time-equivalent employees or pay a penalty. For more information on the IRS’ definition of a full-time-equivalent employee, visit http://bit.ly/full-time-equivalent.
There are new IRS reporting requirements for employers that sponsor self-insured plans, as well as separate reporting requirements for employers that have 50 or more full-time or full-time-equivalent employees. (Ask your accountant whether your company is subject to the new Section 6055 or 6056 rules.)
Another important change — one that is behind the scenes for HVACR contractors — is that on Jan. 1, physicians will be paid on value, not volume. This new provision will tie physician payments to the quality of care they provide.
But, the biggest potential change hinges on the Supreme Court’s decision in King v. Burwell, a lawsuit challenging the federal government’s authority to provide financial assistance to people who buy insurance through federally operated insurance exchanges, which is the situation in 37 states. This decision could deny financial assistance for insurance premiums to millions of Americans and would effectively cut the legs out from under the ACA.
“There’s uncertainty surrounding the case the Supreme Court has agreed to hear,” said Charlie McCrudden, senior vice president, government relations, ACCA. “This case could upend the law because of how it affects individuals in states that haven’t set up their own health insurance exchanges. It could have far-reaching effects on the overall law.”
Arguments in the case are expected to begin this month, with a ruling expected sometime this summer, McCrudden said. In the meantime, many states, companies, and individuals find themselves in somewhat of a holding pattern as they await the result.
The ACA got off to a rough start with well-publicized website problems. Many individuals and companies were also forced to update their plans after discovering their existing coverage did not meet government standards. Things have been going better of late, with the 2015 sign-ups now underway and people better understanding the minimum basket of services their plans must contain. Keeping up with the ACA, however, still can be an onerous task for contractors.
“It’s always changing,” McCrudden said. “Some deadlines and certain requirements of the act have been delayed — sometimes more than once — and that can be hard for contractors to keep track of. When you’re running a business and you select a health care provider for your employees, you hope you can move along and get back to focusing on your business.”
McCrudden said contractors can find an impartial resource at the Kaiser Family Foundation’s website (www.kff.org) to help them stay up to date on the latest changes.
Making the ACA Friendly for Small Businesses
As individuals and companies get used to the ACA, they are finding the law offers provisions that attempt to make it as friendly as possible for small businesses.
For example, enrollment is available year-round in the small employer marketplace known as SHOP. In 2015, small businesses can apply for SHOP, choose a plan or plans, complete the coverage offering, determine how much they want to contribute toward employee premiums, manage employee participation, and pay premiums, all online. Employees can enroll online, too.
In addition, companies that enroll in SHOP coverage and have fewer than 25 employees may qualify for a small business health care tax credit worth up to 50 percent of their premium costs. For more details, visit Healthcare.gov.
Is a Sea Change Coming?
Some believe the availability of insurance from the state and federal exchanges combined with the tax breaks available for companies may ultimately lead to a sea change in the way health insurance is provided.
“It no longer makes financial, legal, or social sense for any U.S. employer to continue providing health insurance for its employees,” said Rick Lindquist, co-author of “The End of Employer-Provided Health Insurance: Why It’s Good for You, Your Family, and Your Company.”
Lindquist contends it makes sense for business owners to replace their group health care policies with defined contribution plans that offer stipends to employees to buy the health insurance that best suits them.
“With all the reforms to the market, it’s actually better for employees to go out and buy their own individual health insurance policies,” Lindquist told The NEWS. “Employees like it because they can pick the plan that best suits their needs, and it’s affordable, permanent, and portable. And, it makes sense for the companies because of the tax credits that are available.”
Of course, HVAC contractors and their companies are all different, and they will employ different solutions to meet their specific needs.
In 2014, Isaac Heating and Air Conditioning, Rochester, New York, joined forces with a number of other area companies in a captive insurance plan.
“We’re basically running an insurance company,” said Ray Isaac, president. “We’re determining what the premiums are going to be for our employees, what we’re going to charge them, and what we’re going to provide as far as benefits and added-value services. It’s complicated and requires a different kind of mindset, but being part of a captive plan is the only real way to take control of your company’s insurance costs.
“We could have saved a considerable amount of money by simply paying the penalty and sending our employees out to find their own health care policies on the open market,” Isaac added. “But we wanted to take good care of them and didn’t feel as if we could rely on the health insurance companies to provide a level of pricing we were comfortable with. We’re only one year in, but, so far, the captive plan has been a good choice for us.”
At 12-employee DiFilippo’s Service Co. in Paoli, Pennsylvania, Laura DiFilippo, vice president, said the company chose to stick with its current “Cadillac” health care plan in 2015, but was forced to cap its monthly contribution and ask employees to pay their premium costs over the set limit.
“We were paying the entire premium, but just can’t afford to anymore,” Laura DiFilippo said. She noted that she and her husband, Vince, who serves as company president, are employees of the company, too.
“I don’t want to sacrifice great care for fewer dollars for my family, and I don’t want to ask my employees to do so, either,” Laura DiFilippo said.
She laments that health insurance premiums are based almost solely on age, which creates the potential for age discrimination in the hiring process. “When it comes to benefits packages, companies know younger guys are going to cost them less than older guys because that’s what’s on the premium charts,” she said.
Going into 2015, the world of health insurance is still transforming, and contractors and their employees have more options than ever. That makes it vital for contractors to involve their business teams in the process.
“Involve your accountant and your legal adviser,” Brooks said. “There’s the counting of employees and various IRS requirements. Take your questions to your business team and make sure you’re compliant.”
Publication date: 1/26/2015