Are you trying to figure out how best to prepare your business for the the impending implementation of the Affordable Care Act (ACA)? I sat down with our CEO here at Software Advice, Don Fornes, to get a better handle on how the act will affect our company and other mid-sized businesses. He helped me wrap my head around the ACA’s impact on our company, and came up with five great tips for other businesses who find themselves in the same boat.
Tip #1: Don’t change your hiring plans just because of ACA
Basically, keep doing what you’re doing. If your company is growing, don’t stop just because you think the ACA will increase your healthcare costs. In fact, being a large group might even be a good thing.
For us over at Software Advice, bigger is better. While it’s true that some large groups’ costs may rise due to the pay or play rule, most large businesses already provide coverage that meets ACA requirements. And there’s no maximum deductible limit for large groups, which will help control premium costs. In the worst case scenario, large groups should only expect to see their health care costs increase five to ten percent.
Tip #2: Delay renewing coverage while the dust clears
The government may still delay or change some provisions of the ACA that have proven unpredictably burdensome on both public and private entities.
Don’s advice: Wait as long as possible to renew your coverage. Companies don’t need to comply with ACA requirements until January 2014, so our company has decided to work with our broker to delay renewing coverage until December. That way, we can keep our current coverage — which we like — and allow ourselves some time to see if the government backpedals on any other parts of the law. It’s a no brainer.
Tip #3: Consider self-funding
Under a fully-insured health insurance plan, the employer pays premiums to an insurance carrier that covers the cost of claims filed by employees. With a self-funded plan, the employer pays for employees’ healthcare claims, assuming the risk previously covered by the carrier. The employer can choose what coverage to provide and how high to set employee premiums, deductibles and copays. Employers can choose to administer the plan themselves, or contract with an insurance carrier or Third Party Administrator (TPA).
So why would an employer take on this risk? If you have healthy employees, you may figure your total claims would cost far less than the premiums that would result from community rating for a small group. So you are essentially placing a bet that you don’t need the insurance. Under a self-funded plan, employers base their expected claims amount on employee claims history and utilization, rather than being lumped into community rating. Self-funded plans are also exempt from state premium taxes, resulting in an approximate 2 percent tax savings per year compared with fully-insured plans.
Tip #4: Consider a health-contingent wellness plan
We’re considering a “health-contingent wellness plan,” which requires employees to meet certain health requirements in order to receive incentives, such as fully subsidized health care. These incentives can be tied to biometric screenings, getting a flu shot, or participation in goal-oriented wellness challenges.
Benefits abound: healthier employees are less likely to file claims, keeping insurance costs down.
Tip #5: Update your budget to reflect increased costs
Given that everyone’s costs are going to go up, figure out where you stand. Look at the coverage options available to your company, and estimate how much you might need to set aside for each possible outcome.
While this article probably hasn’t answered all of your questions — 2,700 pages of text is bound to lead to more than a little bit of head-scratching. I hope Don’s tips will help guide you toward making more informed decisions. At the very least, I hope they will allow you to ask the right questions and successfully navigate you and your company through the transition to the ACA.
This article was originally featured on The New Talent Times. To read more, click here.
[Photo courtesy of Freestock.ca]
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