When a recent hire became eligible for benefits with A&M Corson’s AquaValue, she was unsure if she should opt for the company’s health plan.
The U.S. Supreme Court had handed down a decision on June 28 to affirm the constitutionality of the Patient Protection and Affordable Care Act, and AquaValue’s employee, a single mother, wondered if purchasing a policy from a state-run exchange would be more affordable.
Ultimately, she chose to stick with her employer’s benefits package.
“Our human resources manager said she would be a lot better off signing up here after outlining what she would get for buying through us,” said Greg Boyer, vice president of the Phoenix-area pool company, which covers 50 percent of the insurance costs for its 42 employees.
Boyer’s new staff member is one of millions of Americans who, by Jan. 1, 2014, must be insured either through their employers or by purchasing policies from state-run exchanges.
Despite intense media coverage of the act, many questions remain about how the exchanges will operate and be funded, as well as the financial effect on companies and individuals.
“We don’t even know if the act is ever going to succeed due to all the opposition and, if it does, what will the final act look like?” said Thomas Brown, executive vice president, Aquatech Society of Pool Building and Retailing Professionals. “Until the act is complete and both sides of the argument have come to an agreement, it’s very difficult to understand how it’s going to affect individual businesses like a retailer or a pool builder.”
However, one thing is certain: There are several items that dealers will be responsible for sooner rather than later to comply with the act. For example, more information will need to be tracked and reported. Starting in 2013, employers must state the value of their insurance coverage on their employees’ W-2 forms, according to the Society for Human Resource Management. They also must cap the dollar limits on their plans’ Flexible Spending Accounts, or FSAs, at $2,500, and increase what they withhold for Medicare from the paychecks of employees with incomes of $200,000 or more.
Employers should be aware, too, that when the act goes into full effect in 2014, it limits employees’ deductibles and out-of-pocket expenses, as well as capping the waiting period for an employer to add a new worker to its health care plan to 90 days.
Without question, one of the biggest choices dealers will make in the next 15 months is whether to continue offering health insurance to employees, or to move them into exchanges.
That decision could differ for every company. For example, the act mandates that all businesses with 200 or more employees automatically enroll their workers into a company-sponsored health insurance plan, though employees can opt out and go into an exchange.
On the other hand, companies with fewer than 25 employees will be eligible for tax credits if they insure their workers and pay for at least half of their premiums.
Companies with 50 or more employees are required to offer insurance, move employees into exchanges or pay a penalty of $2,000 per employee per year. (The first 30 workers are exempted from that penalty.)
Employer-sponsored insurance could become less attractive by 2018, when the act imposes an excise tax on so-called “Cadillac” plans that are valued at more than $10,200 per individual and $27,500 per family.
Still, many dealers seem reluctant to dispense with health insurance, which they view as a recruitment and human resource tool. Boyer is one of them. “Insurance ... gave us better personnel, and we are certainly going stay on that road because we’ve got some great people and it’s worked,” he said.
Making a definitive decision won’t be easy for many, so Boyer and others suggest working closely with an expert.
“You can’t figure it out without a consultant,” said Stuart Neidus, president/CEO of Anthony & Sylvan, which currently provides a comprehensive benefits plan for its several hundred employees. “You need to get expert help. It’s way too complicated for people who don’t understand it.”
John Caulfield and Erin Ansley contributed to this story.