[Editor's Note: This is the first in an ongoing series of columns from independent insurance brokerage Holmes Murphy & Associates, Des Moines, Iowa, designed to help retailers grasp changes mandated by the Affordable Care Act.]
SCOTTSDALE, Ariz. -- Many convenience store operators are in the process of trying to comprehend how health-care reform is going to impact their bottom line. Important provisions of the legislation are being implemented and it is critical for retailers to understand what needs to take place for their company to be compliant.
Jan. 1, 2014, is the effective date of the Affordable Care Act's paramount "play or pay" provision, a provision retailers need to pay particular attention to. "Play or pay" states that employers with 50 or more full-time employees, or full-time equivalents, who do not offer health coverage, could face a $2,000 penalty per employee per year. Further, if an employer does offer coverage, but it does not meet certain actuarial values or is not considered affordable, the employer is subject to a separate $3,000 penalty per employee per year.
Within the convenience store industry, it is common to offer coverage to a limited number of employees, such as a management carve-out, or only those working 40 hours or more. In 2014, this will no longer be allowed. In fact, limited medical plans will not be considered credible coverage. In light of new regulations, how you choose to design and adjust your health plan will become increasingly important to your bottom line.
Retailers understand that it is important for them to audit their employee base to truly understand how this will impact their company. Some organizations are considering reducing the majority of their base below 30 hours; however, we find that most companies are not looking to reduce hours. Progressive companies are in the process of monitoring each employee and his or her hours worked. This exercise will help shed some light on how a new certified plan will look for the company in January. Variable hour and seasonal workers cause this calculation to become a bit more complex.
Your organization should consider conducting a financial analysis on current and potential options to identify "Play or Pay" penalty projections and determine the best business strategy. We are working with many industry leaders with proprietary tools to help them establish a short-term strategy to ensure proper compliance for Jan. 1.
There is little doubt that this law is causing a significant amount of confusion. In future columns, we will be addressing topics such as minimum essential coverage, measurement and stability periods, controlled group of companies, impact on workers compensation costs, as well as several other salient aspects of health-care reform legislation.
Jeff Kirke is vice president of Holmes Murphy & Associates, Des Moines, Iowa.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.