Herzlich writes the Small Business column in Newsday.
The business community can breathe a sigh of relief now that employers have been given a year reprieve to comply with a key mandate of the Affordable Care Act that required larger employers to provide health insurance for workers by 2014 or face a penalty.
Last week, the Obama administration said businesses with 50 or more full-time employees would have until 2015 to offer affordable coverage before penalties kick in.
This was welcome news, given that many unanswered questions remain, as some key components and practical applications of the law have yet to be drafted and defined.
"Our clients are pleased to have the delay in order to allow them to assess the market and their approach on how they choose to insure their employees," said Paul Essner, a partner at The Signature Group of Companies, a Garden City-based insurance, employee benefits and financial services firm. Many uncertainties were looming even three years after the law was passed, he said.
The ACA is more than 2,700 pages long, explained Grace-Marie Turner, president of the Galen Institute, an Alexandria, Va.-based not-for-profit health and tax policy research organization. "So far there's been 20,000 pages of regulations that have been issued, and that's only the beginning."
Questions remain: A critical piece of the law -- online exchanges that will serve as a marketplace for individuals and businesses to buy affordable health insurance -- has yet to be created. States including New York have until Oct. 1 to do so, said Lou Basso, president of Alcott HR, a Farmingdale-based HR consulting firm. "Everyone's waiting to see what the plans and pricing looks like."
Many clients with plan renewals in June 2013 were already moving ahead with plan choices that would carry them into 2014, with employer-funded HRAs (Health Reimbursement Arrangements) an increasingly popular choice, said Basso, noting most of these plans should comply with the law. HRAs are often paired with high-deductible plans and offer employers a tax-advantaged savings vehicle to help fund employees' medical expenses, explained Basso.
Bill Powell, owner of Universe Appliance, Gas Heating, Central Air & Plumbing in Seaford, started offering an HRA tied to a high-deductible plan last year. Powell, who works with Alcott, spends over $500,000 annually on health care for his 70 employees.
Implementing this type of plan "helped us hold down premiums," he said, noting higher deductibles mean lower premiums compared to traditional plans. This year, he still saw 20 percent premium increases, but he said the HRA plan allowed him to start at a lower baseline premium then if he had opted for a traditional plan.
Banking on relief:Still, even before the announcement of the delay, Essner found clients weren't particularly focusing on Obamacare as they made plan choices that would bring them into 2014. He said many of his clients would have qualified for "transition relief" -- relief from tax penalties for noncompliance with Obamacare mandates by Jan. 1, 2014, for companies that met certain criteria. It's not clear now whether companies in 2015 will be eligible for transition relief due to the extension, said Essner.
As they seek alternatives, some businesses may opt to self-insure or set up a captive insurance company to control risk, said Dave Kotowski, chief executive of Elevate Captives, a captive management company in Syosset, which has seen inquiries rise 30 percent to 40 percent since the Affordable Care Act.
With a captive plan, the business creates its own closely held insurance company and assumes some of the risks and liabilities, including specified medical costs, said Kotowski.
WHO'S UNSURE ABOUT INSURANCE?
Four in 10 Americans (42 percent) are unaware that the Affordable Care Act is still the law of the land, including 12 percent who believe it's been repealed by Congress.
Source: Kaiser Family Foundation