Affordable Care Act Compliance and the Impact on Home Health Care Business Owners

More than five years after its enactment, the Affordable Care Act (ACA) continues to be one of the top concerns for employers, including those in the home health care sector, not only because it has been one of the most comprehensive laws impacting employee benefits since the Employee Retirement Income Security Act (ERISA) of 1974, but also because of its complexity. Although the ACA doesn’t directly require businesses to provide health benefits to their workers, employers can be subject to penalties if they do not offer coverage, depending on the size of the firm.

ACA Compliance

Since the ACA was passed and implemented, there have been delays and changes to its’ provisions. This is what is required of employers to remain in compliance with the law:  As of 2016, businesses with at least 50 full-time employees or full-time equivalents must offer coverage to at least 95% of full-time employees to avoid penalties. Under the ACA, a full-time employee is defined as “one who works an average of 30 hours per week or 130 hours per calendar month”. In addition, full-time employees are also defined as a “combination of employees, each of whom individually is not a full-time employee, but who, in combination, is equivalent to a full-time employee.” The ACA requires employers and/or health insurance issuers to report to the IRS information about employer-sponsored health coverage.

Additionally, under the ACA, the Small Business Health Options Program (SHOP) was established for small employers (one to 50 employees) to be able to provide health and dental coverage to their employees and to enable these small employers to have some of the advantages—such as the same purchasing power, range of choices, and ability to pool risk–that are available to large companies. Those businesses with fewer than 25 full-time employees may be eligible to receive tax credits when purchasing insurance through SHOP.

Unlike their larger counterparts, under the ACA small businesses don’t face penalties if they choose to not offer health benefits. Many do so, however, in order to be competitive in the job market and attract and retain strong talent. In fact, now that the ACA has been in effect for several years, even smaller employers that either could not afford to provide health coverage to their employees, didn’t have the resources to deal with the complexities of choosing the right plan under the ACA, or opted to offer employees a subsidy toward individual health coverage are now looking at the benefits of offering group health and medical insurance.

The Wall Street Journal, in fact, in a recent article, cites that health insurance providers are beginning to see a trend in which some small business are migrating from subsidizing individual plans to offering group health plans. There are several factors behind this trend, including the fact that prices for individual coverage are climbing and insurance companies are leaving state and federal marketplaces/exchanges that provide individual coverage. In addition, individual coverage has become less attractive as insurers, in an effort to cut costs, continue to narrow options for physicians, hospitals and prescription drugs. Group plans can often provide more value to employees.

Attracting and keeping employees while also remaining competitive is important to the home health care industry, where annual turnover rates can run between 30% up to 50%+. Offering group coverage as part of a salary/benefits package helps to boost a business owner’s employee retention and improve overall employee wellness and productivity with preventive care and annual physicals; provides employees with more value and purchasing power with group rates; and gives the company, depending on its size, the ability under the ACA to obtain tax breaks for the contributions made by the business. There is also the fact that under an individual benefits plan, the employer may lose control of how subsidized benefits dollars the company is providing are being spent by employees. Some employees may opt to spend the money on something other than health insurance, which can affect your productivity when those employees become ill and miss work because they are unable to pay for medical treatment.

Manchester Specialty provides integrated commercial insurance solutions for the broad spectrum of home health care, hospice and medical staffing organizations. For more information about our currently available property/casualty products, please contact us at 855.972.9399.

Sources: Wall Street Journal, The Henry J. Kaiser Family Foundation