How Does the ACA Affect You?

But I’m not subject to the Affordable Care Act!

There are many business owners out there with less than 50 employees who believe that having less than 50 employees means they aren’t subject to the Affordable Care Act (ACA, or “Obamacare”). Many of my own clients are using brokers who are not going through the training and certification needed to continue offering compliant employee insurance. When I ask if their broker has mentioned certain things to them about their employee insurance, I often am told “no, I haven’t heard about that.”

I’m not encouraged when I find I know more about the changes to healthcare than my client’s broker… or that their broker just hasn’t bothered to follow up with my client.

My HR survival tip

Every employer in California should find out if they are affected by ACA and, if so, in what way. I’m not an insurance broker and don’t want to be but I try to keep informed about the basics of ACA because it does affect so many of my clients. Here are the questions I typically ask business owners:

• Do you offer group medical and/or dental insurance for your employees?
  — If you don’t have 50 employees and don’t currently offer insurance, you can breathe a sigh of relief because you aren’t subject to this law… yet.
• Do you have an executive carve-out?
  — ACA currently requires all levels of employees, including the executives, to be offered exactly the same plans at the same rates and same company co-pays. You can offer executives other types of perks but not when it comes to medical or dental plans.
• What portion of the premium do you pay?
  — ACA currently requires the company to pay 50% of the premium of the employee-only cost for the lowest-priced plan you offer. Starting in 2014, that 50% the employee pays cannot be more than 9.5% of their gross monthly pay. The company isn’t required to pay more than that so it’s okay to have the employee cover the cost of any plan “upgrades” or dependent care.
• What is your eligibility period before an employee can be on the insurance?
  — On 1/1/2014, ACA requires eligible employees (who elect coverage) to be covered by the insurance on day 90. However, California decided to top that and has a new law that says the employee must be covered on day 60. That means the longest eligibility period you can have as of 1/1/2014 is “the first of the month after 30 days of employment.”

Even if you take advantage of the early renewal discounts offered right now by insurance carriers, you should be prepared for a large increase next year. I’m still waiting to hear what the rates will be for the small business plans offered through the state… let’s keep our fingers crossed but our feet on the ground.