March 14, 2014
If you have a client that says they’re “not worried” about the Affordable Care Act, it’s your role as their benefit adviser to “tell them they should be,” attorney Peter Marathas of Proskauer Rose LLP said…at EBA’s Workplace Benefits Renaissance in Atlantic City, N.J..
Those who ignore the past are doomed to repeat it. That’s why Marathas told attendees that employee benefit advisers should heed the lessons learned from the implementation of Massachusetts’ universal health care system, with the No. 1 lesson being that the system was less about reforming health care than it was about revenue generation. With employers on the hook for hefty fines for noncompliance with the Massachusetts laws, the implementation of the universal health care system there “has been a blank check to the commonwealth,” Marathas said. He predicts the same could occur on a federal level under the ACA and implored advisers to “sell compliance.” “You don’t want to become their lawyers,” he said, reminding attendees that errors and omissions, or E&O, policies will not protect advisers doling out legal advice. “But, your clients are demanding compliance from you, and you can give guidance.” Marathas said advisers should be discussing these four ACA-related issues with clients:
1. Overall compliance – Employers of all sizes should be concerned, he said. “This is a very complex law with complex regulations.” As their adviser, you need to know the law and so do they. Likewise, your guidance to employers, Marathas said, should be, “document, document, document. Recordkeeping is essential.” Working with vendors who know the law is also essential, he said. “You can add value to your relationship with your clients by reminding them that they should be talking to their payroll vendor to make sure they have a system in place that can track hours.”
2. Non-discrimination rules – Although non-discrimination rules for non-grandfathered plans have been delayed, once those regulations are released, employers will need to comply. While most employers outside of the hospitality industry will have little trouble meeting the eligibility test for non-discrimination, the benefits test will be more problematic, Marathas said. Under the regulations, a benefit offered to any one highly-compensated employee must be offered to all non-HCEs. Every employer has HCEs, Marathas reminded, as the HCE is considered the top 25% of any workplace as determined on a controlled group basis. So-called discriminatory practices are commonplace in the workforce and many employers may not realize they will now be banned. Some common discriminatory practices include offering health care coverage to management-level employees only, waiving waiting periods or other requirements for HCEs or underwriting COBRA coverage for HCEs only. The fines for these practices will be large: $100 a day per non-HCE. Advisers should encourage clients to review their contracts now and consider what changes should be made, he said. “Don’t let your clients hear about this from another broker.”
3. Deciding whether to pay or play – Hopefully you’re well into this with your clients, Marathas said. This goes beyond the numbers. Knowing the numbers is just the fundamental stuff. You have to know your client’s business. You have to know their demographic. You have to know whether or not you’re giving them the right advice with respect to these penalty structures, he said. Too many employers have come to me and said their broker has told them it’s a “zero-sum game. But it’s not,” Marathas said. You have to get familiar with the offerings on the exchange, particularly for employers with employees making near the minimum wage.
4. Counting hours and related rules – You need to get to know these rules, but don’t over-apply them. Employers just say that somebody is variable hour, but it’s not that easy, Marathas said. Hours of service rules are complicated, including exceptions for certain classified employees. Employers with employees working non-traditional hours will especially need guidance, including employers with adjunct faculty members, employees paid on commission, transportation employees, etc. “Make sure your employers hear these rules from you, not from another broker,” Marathas said.