MADISON, Wis.-While more healthcare reform requirements kick in in 2014, the one to pay close attention to, according to one expert, is the "pay or play" mandate.
"For 2014, all kinds of plan design requirements, such as changes to annual limits and rules around guaranteed issue and renewability take effect," said Brad Pricer, senior manager, employee benefits at CUNA Mutual Group. "These are issues fully insured carriers are likely taking care of and credit unions should just make sure their plans are indeed in compliance. However, credit unions need to look closely at the pay or play requirement. I urge them to make sure they understand what this rule means to them and the penalties for not offering healthcare coverage."
Pricer said under the pay or play rules, employers must determine whether their healthcare plans are affordable and provide minimum coverage. Starting Jan. 1, 2014, businesses must pay a penalty tax of up to $3,000 per employee if their healthcare plans are not affordable and provide minimum coverage. The penalty is $2,000 per employee if the credit union does not provide any coverage.
A healthcare plan is considered affordable and offering minimum coverage if all employees pay less than 9.5% of their household incomes for coverage and the employer pays for at least 60% of covered healthcare expenses. Pricer said credit unions can access a "pay or play calculator" on the CUNA Mutual website that will help them determine if their plan meets these new standards (http://www.cunamutual.com/portal/server.pt/community/health_care_reform/543/health_care_reform/685412).
"It's much easier than doing calculations on your own, plus you can see how changes in plan design position your offering under this new requirement," Pricer said.
Caution Over Assumptions
The pay or play rules apply only to companies with 50 or more full-time employees. But Pricer said those just below the cutoff should not assume these rules don't apply to them. "You have to also take into account full-time equivalent employees by adding in part-time employees as well."
Pricer cautioned CUs above the cutoff against running the numbers and choosing to take the penalty instead of offering healthcare coverage. "Dollar for dollar it will likely be cheaper to drop coverage, pay the penalty, and tell employees to obtain coverage through the public exchange. But the exchanges will be cookie cutter, bare bones, less customer friendly plans. That will hurt credit unions that hope to attract and retain good talent, especially if their competition for talent still provides their own healthcare plans to employees, which will likely be superior to those obtained through the public exchanges."
For info: CUNA Mutual Group: www.cunamutual.com