The financially strong, that is.

I have been diligently following the timeline for the rollouts of the various Health Care Reform (HCR) provisions since its inception.

If you’re an HR professional behind the scenes, take a look at these provisions and start thinking ahead.  If you’re a business leader, be sure your HR or benefits pro is on top of his or her game.  I have a few talking points on my mind that I’d like to share.

The waivers
Big companies like McDonald’s, Waffle House and Universal Orlando are among companies that received a one-year waiver, allowing them to maintain minimal coverage below legal standards.  As of January 2012 there were 1,231 companies who received health care waivers which means they don’t have to comply with the HCR provisions.  More companies on this list are Ruby Tuesday, AMB Bowling Worldwide and local chapters of the International Brotherhood of Trade Unions Health and Welfare Fund and the Teamsters.  Unions — there’s a shocker!

Waivers are granted to restaurants and other companies by the Health and Human Services Department (HHS)  that offer “limited-benefit” plans.  Limited-benefit plans are similar to catastrophic benefit plans with low premiums and high deductibles.  They’re normally put in place to cover part-time and low-wage employees.  HHS started granting waivers when insurance carriers threatened to raise premiums dramatically or drop their coverage entirely instead of pay for the additional coverage required under HCR.  So these waivers allow for low-wage earners to be pushed down even lower in the standard of living category.  HHS has only denied 96 waiver requests.

Besides the fact that the companies with waivers won’t be subjected to the reporting requirements, penalties and administrative work accompanying these mandates, these companies employ about 4 million people!  How will these 4 million workers have access to affordable health care if their employer is exempt from complying with HCR?

We’re so tough that when the big boys whine, we run for the hills and acquiesce to their demands.  When our government is publicly vocal about insurance companies “spending too much on things like administrative costs and CEO bonuses, and not enough on your health care” but is already saying it’s okay for big organizations not to comply by issuing waivers, what will happen in 2014 when the more intense provisions are scheduled for rollout?

But wait, HCR is a good thing because “all Americans deserve the right to have access to affordable health care.”  I bet the companies who were granted waivers are already working on finding ways to apply for extensions to their waivers. I guess we’ll wait and see.

Small business
There is a tax credit that has been in effect and will cover up to 35% of the premiums a small business pays for health insurance.  In 2014, the rate will increase to 50%.  The small businesses eligible for tax credits need to meet the below criteria:

-  Company must have less than the equivalent of 25 FTEs (companies with less than 50 part-time employees are eligible).

-   The employees’ average annual wages must be below $50K (operative word is “average.” While we know the mathematical definition, the government’s definition is on the TBD list).

-  Company must subsidize at least 50% of the cost of health care coverage for employees.

-  To avoid incentives to choose a high-cost plan, an employer’s eligible contribution is limited to the “average” cost of health insurance in that state (there’s that word again and who determines what’s average.  That’s TBD).

-  Non-profits are eligible for a 25% tax credit that increases to 35% in 2014.  The credits are lower for non-profits to ensure the value of the credit is equal to that provided to for-profit companies that can’t claim a tax deduction for the amount of the credit claimed.

-  The credit phases out for companies with average wages between $25K and $50K and for ones with the equivalent of 10 and 25 FTEs.  (I’m serious about the word “average” — it will be defined differently).

If you’re a small business, how do you rate with these requirements?

Look closely
If you view Health Care Reform as the final frontier for “all Americans to have access to affordable health care” then I urge you to dive deeper.  Of course all Americans should be able to have affordable health care and not be subject to many of the restrictions that insurance carriers impose on subscribers.  No American with a life-threatening illness should die because they’ve reached their lifetime medical cap with their carrier.  We can agree on that being a common goal.

The issue is that HCR will cost Americans and businesses more money in the long run.  It will not reduce our deficit.  It will ensure more job security for current and new government workers — the ones our government is concerned about.  If you’re in the private sector, the government isn’t worried about you — you’re doing fine.  Oh wait, you’re not doing fine — that’s been clarified.

With the extensive and painstakingly confusing list of reporting requirements, limits and caps to adhere to and penalties to both companies and insurance carriers alike, compliance staffing needs to be beefed up everywhere — businesses, insurance carriers, insurance brokers, tons of TPAs, etc. — to meet the demands of the required government red tape reporting.  Don’t forget about the government side.  The process needs to be policed and people will need to be hired and trained to ensure accurate reporting and to slap the hands and impose fines on the companies who are misbehaving.

What about the training and implementation of the technical modifications that need (for W-2 reporting) to be made by payroll and financial reporting software providers?

Yes, this is creating jobs for HCR folks and government workers but is this where companies want to spend their money?  Will paying more money for compliance grow a business?  When companies need to pay for more, they’re going to charge (consumers and businesses) more.

2014
If you are an employer with more than 50 FTEs and have a plan in place that “does not pay for at least 60% of covered health care expenses for a typical population”, you may be penalized by not providing employees with affordable coverage.  Oh and add “typical population” to the TBD definition list.  While the term hasn’t been defined, the penalty has been.

The compliance and penalty variables are too cumbersome to list here, so take a look at this flowchart.

Long term pain
Every single one of the HCR provisions will require an inordinate amount of work behind the scenes to both ensure and report compliance.  While companies in this economy are still not comfortable hiring for positions they need to grow their business, they’ll now be forced to hire (or outsource) for compliance purposes.

Where is the money coming from to pay for this?

At the end of the day, nothing involving government agencies is painless, inexpensive or free.  Just try calling the IRS with a simple question and you’ll have the point proven to you quickly.

I would hate to see our small businesses fail or entrepreneurs give up their passion because of Health Care Reform.  I hope I’m proven wrong but I’m concerned that only the financially strong are going to survive.