With the launch Tuesday of the Affordable Care Act’s (a.k.a. Obamacare) insurance exchanges under the provision known as the “individual mandate,” companies have little to worry about in the short term, labor and employment lawyers said.
Although the Health Insurance Marketplace for Americans who don’t have insurance or want to change their health plans opened October 1, businesses have until January 2015 to give reasonably priced health insurance to employees or risk fines. That ACA provision for companies, known as the “employer mandate,” applies to businesses with at least 50 full-time employees, including full-time equivalent workers.
Andy Anderson, a partner in the employee benefits and executive compensation practice at Morgan, Lewis & Bockius, called the start of marketplace a “nonevent” for most of his clients, who are focused on the employer mandate.
“This exchange doesn’t really mean much to them,” he said.
But Anderson noted that his clients have a lot of work to do in advance of January 2015, despite receiving an extra year to comply with the employer mandate. The White House announced in July that the U.S. government wouldn’t start enforcing the mandate in January 2014, after facing pressure from the U.S. business community, which expressed concerns about burdensome reporting requirements.
In an effort to make it easier for companies to comply with the employer mandate, the Obama administration last month released a proposal intended to streamline or reduce what businesses should report to the federal government to show compliance.
Many businesses, however, are still trying to determine which employees get company health insurance, Anderson said.
“A number of employers are still scrambling,” he said.
But the October 1 launch of the exchanges had some significance for companies. Businesses were required to let their employees know about the insurance exchanges by Tuesday; they also should have policies in the works about what to do if workers go to the exchanges and say their employers’ health plans are unaffordable, said Proskauer Rose partner Paul Hamburger, a co-chairman of the firm’s employee benefits, executive compensation, and ERISA litigation practice center.
Companies face annual tax penalties of $3,000 per full-time employee if they don’t provide affordable coverage.
“An employer has to know who is going to answer [affordability questions] and what they’re going to say,” Hamburger said.
And with the ongoing government-funding impasse over Obamacare, companies might have new, unexpected matters related to the health care law to address down the road, he said.
“Employers just need to keep their ear to the ground,” Hamburger said.
