Should large and small employers be treated the same under the ACA?

July 23, 2013

health-care-lawThis is #4 in a series of Obamacare Reports by Mitchell Law Office

Under the Affordable Care Act, large and small-business employers are treated differently. But now that the large-employer mandate has been postponed for a year, should all employers be treated the same way starting in 2015?

The large-employer mandate requires that companies with 50 or more full-time-equivalent employees (that work 30 or more hours per week) offer group health insurance that meets certain standards for coverage or pay a penalty. These employers also have to provide new reports on employee working hours, income, and insurance coverage. These requirements have now been postponed for a year, until 2015.

Small-business employees do not face a mandate, but are more concerned about company risk associated with offering group health insurance. They can choose to set up coverage through the new Health Exchanges (with employees then to enroll and possibly be eligible for subsidies). These employers are also eligible for a temporary, limited tax credit if they choose to participate.

Suppose that these requirements were merged for 2015?

A long-term tax credit could be made available to all employers (to be calculated on the first 50 employees), which would continue to help motivate small-business employers and encourage large employers to feel better about the ACA.

If implementation of the ACA goes well in 2014, then the large-employer mandate might be weakened to be less objectionable, and more incentives could be added in for the offering of group health insurance by all employers. If the ACA begins to establish new public norms for health care coverage, perhaps it would not be as hard to encourage all employers to offer coverage with essential health benefits.

New strategies could also be developed for large employers to be able to purchase coverage through the Exchanges (but without employee subsidies being available).

Reporting about employee working hours and income, and insurance coverage, could be simplified and applied to all employers.

Large employers could be encouraged to “partner up” with smaller employers, to help both become better prepared to offer group coverage, in something of a “mentorship” arrangement.

Something creative could be done about the 30 hours-per-week minimum, for employee coverage to be required. Perhaps part-time employment could simply result in partial payment of premiums for coverage into an Exchange. There would be no incentives for changes in hours per week.

How could such a move affect attorneys? There would be a need for legal advisers at the local, state and national levels to work with employers in interpreting changes, preparing proposals, advocating revisions, and negotiating with state agencies, Exchanges, and the Department of Health and Human Services (HHS).

Widespread changes in employer requirements would require help from attorneys in explaining and accommodating changes, deciding on company interests and strategies, and helping revise organizational relationships.

And all employees would need help in understanding changes in their benefit relationships with employers.

More on these and related topics may be found in a recent book by the authors that describes implementation of the ACA and its impact on legal practices.

Previous installments of “Obamacare Reports” address the various ways in which implementation of the ACA is affecting legal practices:

Report #1   Report #2   Report #3