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Wednesday, July 03, 2013

The Healthcare Reform Delay: What it Means for You

Yesterday's announcement by the administration, combined by a new approach by Congressional Republicans, changed the game completely for Healthcare Reform (HCR).  The White House, almost without warning to anyone, delayed by one year the key provision requiring employers to provide affordable coverage to all full-time employees (defined as 30 hours per week or more) or pay a fine. It was to take effect January 1, 2014 and now has been delayed until that same date in 2015.

Most of the heat around implementation was coming from the law's quirky definition of a full-time employee.  The issues are:

  • The definition of full-time as 30 hours is at odds with the Wage and Hour definition for purposes of calculating overtime at 40 hours.
  • The definition only applies to medical coverage, leaving benefits administrators a choice to administer coverage differently for medical or adopt the extra expense of changing eligibility rules for dental, vision, etc...
  • The 30-hour rule is not for hours worked as with Wage and Hour: it is 30 hours paid, meaning that all forms of paid time off (vacation, sick, PTO, jury duty, paid leave of absence, etc...) had to be rolled into the calculation, thus requiring that complicated reports be written.
  • In the guidelines from the government I have yet to see a definitive set of criteria for these reports: every company was making their own and faced IRS penalties if they did them wrong and denied coverage to a legally-eligible employee.

Because the counting period for the calculation of 30 hours per week required a six-month look-back period, businesses were already having to start writing and running hours-worked reports for part-time staff.  July 1 was the start of the first pay period where reporting should be run if businesses, some already starting their FY 2014 budget cycles, wanted to know the number of newly eligible employees for next year.

Meanwhile Congressional Republicans yesterday introduced bills to redefine the minimum number of employees required for a company to have to comply with the Act, from 50 to 100, and a redefinition of a full-time employee.  It signals a new approach in their opposition of the law: from grandstanding bills to repeal it (even when they knew they didn't have the votes) to a strategy of chipping away at its key provisions.

The White House's delay combined with the GOP's new strategy puts a whole new set of variables into the HCR situation.  It will almost certainly remain law and be implemented, but there is now enough uncertainty that businesses should adopt a wait-and-see attitude on changing eligibility rules and offering benefits to employees not currently covered.

As for individuals, nothing in these changes alters the implementation of Insurance Exchanges in each State.  In states which agreed to run their own, those are coming October 1st: in those that did not the federal government is supposed to have those running by January 1, 2014.  How "affordable" that coverage will be remains to be seen, but since it is guaranteed issue it will still benefit those who cannot obtain coverage elsewhere.

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