Businesses make moves ahead of Obamacare’s main thrust

Check out this recent article in New Orleans City Business:

POSTED: 10:49 AM Tuesday, April 2, 2013
BY: Carlie Kollath Wells, Contributing Writer

Major elements of the Patient Protection and Affordable Care Act take effect next year, forcing New Orleans-area companies to learn more about how it will effect the health insurance coverage they offer to employees. Defined contribution plans, spousal insurance audits and even work force reductions are on the table as employers look for ways to reduce their expenses.

“The dollars associated with insurance have gotten to a point where they demand more attention, and we expect it to increase,” said Tom Daly, an employee benefits broker with Benefit Administration Group and president of the Human Resources Management Association of New Orleans.

“Let’s revisit the way we fund benefits” is a more common discussion than ever in the HR sector, he said.

The most noticeable trend in New Orleans is companies moving toward defined contributions. Daly compared the change to when businesses switched from pension plans to 401(k)s.

“It’s moving away from a percentage and toward a dollar contribution,” he said.

Instead of funding a percentage of the employers’ health care coverage costs, the company would allocate a specific dollar amount each month or each year for the employee. The figure could be standard or could be negotiated individually, Daly said, comparing the process to setting a salary.

“You don’t pay everyone the same amount when you hire them,” he said.

Daly said he sees this concept catching on at businesses with fewer than 50 employees, the key number in determining mandatory health care coverage that goes into effect next year. Those with more than 50 must provide affordable basic coverage to employees or pay a fine, reaching $250 per employee each month with an annual cap of $2,000 per full-time employee, minus the first 30.

Although companies with fewer than 50 employees won’t be required to provide insurance, they are expected to face increased premiums.

Quinn Jones, owner of Cabildo Staffing in New Orleans, said it could take a couple of years for most companies to adopt defined contributions. He saw a business opportunity in the coming changes and created BenefitSync.com, an online service small businesses can use to put defined contribution plans in place and take advantage of their tax benefits. The site is live but it won’t be fully launched until this summer.

Along with defined contributions, Jones said he’s hearing more companies talk about reducing their employee numbers so they can avoid the upcoming health insurance regulations.

“There’s a big incentive for companies that have between 50 and 100 employees to find out how they can get below 50,” he said. “How they do that will vary.”

One option is to make current full-time employees part time with 30 hours or less, he said. Another option is to outsource the staffing to companies like Cabildo, which concentrates on skilled labor and management and doesn’t offer health insurance to its employees. Jones said regulations still are being worked on to determine how staffing agency employees will be covered.

The third major insurance trend Daly identified as gaining ground in New Orleans involves companies changing their policies for spousal and dependent coverage.
“We are seeing some people not contribute to dependents’ premiums,” he said. “The most aggressive (approach) is: ‘We offer insurance to employees and employees only.’”

He said there are also more spousal audits taking place at larger companies. The audits identify if the employee has another insurance option through the employer. If the spouse has an option, the company might choose not to cover him or her as part of its plan. The audits remove the couple’s option to choose one employer’s plan over the other.

“We’re seeing it as a trend, but it’s not that pervasive with small companies,” Daly said. •

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