ACA PAY OR PLAY – ACT NOW (PART 1)
If there is one piece of advice we could share with you regarding the Affordable Care Act’s employer shared responsibility (pay or play) mandate it is this – do not procrastinate; plan and prepare now.
We meet with and speak with many employers and are amazed by the inertia that exists when it comes to preparing for ACA compliance. We’ve heard all the excuses – not enough people to dedicate to the process, not enough time, not enough money in the budget, etc. We’ve even heard the cringe-worthy excuses: “We don’t need to do anything. ACA is going to go away, so we’re good.” and “I’ve seen the headlines compliance was delayed.” We feel these reasons are based on an incomplete understanding of what is involved for an employer to become compliant. There is no magic solution. This is certainly a situation where an ounce of prevention is worth far more than a pound of cure.
Let’s get back to basics and take a look at the “whys” and “hows” of the ACA so you can proactively put your plan and team in place now.
At the very heart of the ACA, the intent is to insure the uninsured and provide adequate healthcare for Americans. One of the ways to do this is to incent employers to provide coverage for their employees (and dependents). If employers are not providing coverage for their employees, then the individual needs to purchase coverage for himself/herself and her family. The individual may not be able to afford the healthcare coverage premium, so the government can subsidize this coverage through a premium tax credit. It can then be logically inferred that the premium tax credit is funded through tax payer dollars and the various penalties associated with not complying with the ACA. Employers can either provide minimum essential coverage that is affordable and provides minimum value benefits to their eligible employees (play) or they will be penalized (pay) – either method directly or indirectly results in providing coverage for their employees.
What this really means is that you either play up front or pay at the end. We’ve found that it is easier to understand what to do if you start with the end result and work backwards through the process.
Over the next few weeks we’ll be taking a look at the phases of compliance: reporting, testing, determining plan year, data collection, and how to manage the ongoing process. Visit us next week for our look at why you should begin capturing data now to help with the mandated IRS reporting.
