Is Your Health Plan Ready for 2017?
Affordable Care Act compliance, along with benefits cost management and employee wellness programs, are emerging as the top issues affecting small business health plans.
As 2017 approaches, small businesses should reevaluate their employee health insurance needs and what they need to do to comply with new health insurance laws.
Although businesses with fewer than 50 full-time equivalent employees do not have to provide health insurance for their employees, they must comply with the ACA’s reporting requirements. All businesses with employees must:
- Withhold and report an additional 0.9 percent on employee wages or compensation that exceed $200,000.
- Report the value of health insurance coverage you provided to each employee on his or her Form W-2.
- File an annual return reporting certain information for each employee covered under a self-insured health plan.
In an effort to help small businesses comply with the Affordable Care Act, a new study by HUB International explored ACA compliance, along with benefits cost management and employee wellness, by surveying over 400 senior-level human resources and finance executives at companies with 50 to 1,000 employees.
“HR leaders are operating in an era of unprecedented disruption brought on by ACA, rising health care costs and the increasing demands of a multi-generational workforce,” wrote the authors of the HUB International report titled, “Employee Benefits Barometer: SMB Perspectives and Priorities in an Era of Disruption.”
Era of Disruption
The survey found nearly two in three business owners employing between 50 and 99 people are concerned about remaining in compliance with the ACA regulations. Other findings included:
- 69 percent of employers plan to change their benefit plan structure and/or operations to avoid ACA reporting fines and penalties.
- 61 percent expect IRS fines for ACA reporting to be negligible to their bottom line in 2016.
- 60 percent believe ACA reporting is primarily an HR issue.
- 64 percent have optimized design and operations strategies to eliminate the fines/penalties, but will struggle to stay in business.
- 54 percent say ACA reporting is primarily a finance issue.
As this survey shows, employers perceive themselves to be on top of ACA reporting issues, but nearly two-thirds say that their businesses will struggle to stay afloat despite efforts to optimize plan designs and operations—an indication that employers are exhausted by ACA compliance, the authors of the HUB International report wrote.
“Due to the potential audit implications of ACA reporting, organizations need to be able to defend and manage the decisions they made and reported on,” the authors noted.
In the survey, employers did not rate ACA reporting as their top concern, but because the survey took place prior to completing year-one reporting deadlines, “it may be an indication that employers don’t know where they are most vulnerable,” the authors wrote.
“Most responders ranked cost management and health and performance issues as bigger priorities over ACA reporting,” the authors wrote. “This may be an indication that employers have under-estimated the complexity of ACA reporting.
“Just over half of HR leaders (57 percent) cited accuracy in calculating and reporting the affordability of benefits as their top concern for ACA compliance. While 55 percent of mid-sized and 56 percent of the largest middle market companies ranked this as their top concern, it was especially an issue among the smallest players (66 percent). Close behind, at 53 percent, were concerns over how employee subsidy eligibility and employer liability are tracked and reported.”
Wellness and Productivity Are Top Priorities
Meanwhile, the survey also found that employee wellness and productivity are top priorities, and two-thirds of respondents are seeing a return on investments in their programs, specifically in improved employee productivity and morale. When asked to identify their top benefits priorities, HR respondents ranked improving employee wellness and productivity (83 percent) and managing benefit costs (76 percent) as top priorities.
The report found that employers who are implementing wellness programs are reporting improvements in employee productivity and morale.
“Middle market employers are starting to put more effort in longer term benefits initiatives that support the connection between healthy employees and business performance,” the authors wrote. “These programs are the cornerstone of a long-term benefit strategy that supports a healthier and more engaged workforce.
“There’s a reason health and performance initiatives have gained traction among middle market benefits decision-makers. These strategies are delivering a return on investment, according to 66 percent of respondents. How has it been evidenced? More than a third of respondents cite improved productivity (35 percent) and morale (34 percent). This is especially true among the larger firms, at 40 percent and 38 percent respectively.”
Employers are reaping the benefits of their cost-cutting initiatives, but there appears to be many missed opportunities to deploy proven cost management strategies, the authors wrote.
“Are their efforts paying off? Sixty-five percent agree that they are doing all they can to contain rising benefit costs,” the authors wrote. “Seventy percent note that their strategies are successfully reining in costs. In fact, a significant percentage of the HR respondents indicated they have revamped their plan designs to reduce costs. Leading that change, 51 percent have implemented voluntary benefits for the first time as part of their cost savings strategy.”
For more information on complying with the Affordable Care Act, controlling your costs or adding voluntary benefits to your organization’s offerings, please contact us.
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In this issue:
This Just In...
Is Your Health Plan Ready for 2017?
Wellness Programs Work…If Employees Participate
Consistency Creates Big 401(k) Nest Eggs
Voluntary Benefits Help Reduce Financial Stress