Make Your Way to the ACA

November 11, 2013- On January 1, 2014, many of the employer obligations in the Affordable Care Act (ACA) will begin to take effect. In a recent article titled "Six Steps to Prepare for the Affordable Care Act," the Society for Human Resource Management (SHRM) has advice on how to formulate and commence an action plan for meeting the deadline.

Mark Your Calendar

Most ACA provisions, such as those listed below, become effective on January 1, although, for fiscal year plans it's the first day of the plan year following January 1.

- No lifetime and annual benefit limitations

- No exclusion of coverage for pre-existing conditions

- Must offer preventive service benefits

- Non-discrimination rules for fully insured plans

Prior to the deadline, "Employers that offer group health plan benefits to their employees should ensure their self-funded and fully insured plans comply with the ACA provisions that will become effective in 2014 … This means examining and, in some cases amending, plan and insurance contract provisions."

Make Your Corrections

Next, begin to identify workers who've been misclassified as independent contractors so as to comply with provisions requiring accurate counts of employees and which are full time. SHRM writes, "The financial stakes for errors in worker classification are high and will only increase once the ACA is fully effective."

Consider Your Structure

Third, because "the ACA requires 'related entities' to count employees as if employed by a single entity," SHRM says to "investigate the application of the controlled and affiliated service group rules," and "determine whether related-entity issues exist and try to resolve them, if possible.

Examine Your Contracts

Next, SHRM points to Treasury regulations promulgated under the ACA that seem to suggest penalties may apply in cases of "common law" employees as determined under IRS payroll tax regulations. Also, companies and employment agencies may be considered co-employers and conceivably liable for ACA penalties.

Stop Your Messing

SHRM's fifth step, really no step at all, is "Avoid 'messing' with your insurance contract renewal dates." Referencing the way in which Treasury regulations have a health care defined plan year, along with insurance contract distinctions between a plan's funding mechanism and the plan itself, SHRM writes, "Changing the renewal date of the insurance contract that funds a group health plan will not be successful in altering the actual plan year."

Model Your Scenarios

"Modeling various ACA-driven scenarios allows employers to control the ACA’s impact, rather than being driven by it," writes SHRM. "The employer that finds an accounting or consulting firm with good ACA-modeling software and takes advantage of it will be better able to respond to the ACA’s mandates."

The article concludes, "ACA compliance, like most legal compliance endeavors, will be easier, more cost-efficient and effective if approached proactively."

Read the full Society for Human Resource Management post here.

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