How PPACA Will Affect Your Business The Next 5 Years?

Tod Covert  By Todd Covert, Executive Vice President of ACA Track

The Patient Protection and Affordable Care Act (PPACA) – also known as the Affordable Care Act or ACA – is the landmark health reform legislation passed by the 111th Congress and signed into law by President Barack Obama in March 2010. The legislation includes a long list of health-related provisions that began taking effect in 2010 and will “continue to be rolled out over the next four years.” Key provisions are intended to extend coverage to millions of uninsured Americans, to implement measures that will lower health care costs and improve system efficiency, and to eliminate industry practices that include rescission and denial of coverage due to pre-existing.

What does it mean for business today?

Business With 50-99 Employees 2015

Key Point #1

Navigating through transition relief to determine the date you need to make sure you are in compliance.

Applicable large employers (ALEs) with fewer than 100 full-time employees, including full-time equivalent employees, may have until 2016 to offer health insurance to eligible employees and their dependents without facing penalties.

This transition relief is available to employers who can certify that they have not reduced their workforce to remain under the threshold and have not materially reduced or eliminated health coverage previously offered. This certification needs to be included with your filing under Section 6056 for 2015.

The IRS will still grant transition relief to employers who reduced their workforce for “bona fide” business reasons.

Key Point #2

If you are over 50 FTE (Full-Time Equivalents) or part of a control group (Parent Company) with more than 50 FTE than you MUST file the 1095-C and 1094-C even if you do not offer coverage.

Key Point #3

Don’t “expect” your payroll company to complete these 1094-C and 1095-C forms.

Why?  Most payroll companies don’t even track the information required to complete these new IRS forms—It is more a benefit enrollment and plan design function than payroll.

  1. Dates of hire and waiting periods determine when employees are in the limited assessment period. Partial months are treated uniquely differently than full months and the series coded will change. Most payroll vendors only track deductions.
  1. Termination, rehire dates and class changes impact offer of coverage and safe harbor designations. Employees with a number of changes during the year can see a variety of different codes appearing on form 1095. Not a payroll function
  1. Offer of coverage determines whether 70% (2015) and 95% (2016) levels are reached or significant penalties are to be paid. Not a payroll function
  1. Safe harbor designations and income drive affordability calculations. Not a payroll function
  1. Transition relief provides the ability to mitigate risk and avoid penalties altogether.  Not a payroll function

Key Point #4

Start balancing culture and cost now because the “Cadillac Tax” is on the horizon in 2018—It’s not a matter of “IF” we hit the Cadillac Tax it’s a matter of “When” we hit the Cadillac Tax.

If health insurance exceeds $10,200 in premiums for an individual or $27,500 for a family. The tax amounts to 40 percent of the cost above that threshold AND its Non-Tax Deductible.

Why do we say “When” we hit the Cadillac Tax?  The insurance cost threshold ($10,200 in premiums for an individual or $27,500 for a family) only increases at CPI each year which is about 3.1% and Healthcare inflation increases close to 8.0% thus the X & Y axis lines are eventually going to cross.

Please join us September 29th for Women Accessing Capital: 5 Things You Need to Know About the New 1094-C and 1095-C IRS Reporting. Register now! 

“Fair Pay” Rules Just Aren’t Fair

women comp

By John Stanford, WIPP Government Relations

Women Impacting Public Policy (WIPP) recently submitted comments on proposed regulations that would require federal contractors to disclose labor violations from the past three years. This blog accompanies those comments as a summary of WIPP’s position. For more details or if this impacts your business, I encourage you to read the full comment here.

Last summer, President Obama issued an Executive Order with the goal of barring bad companies from winning federal contracts. WIPP, along with most in the contracting community, agrees that companies that follow the rules should not have to compete against companies that break them for federal contracts.

In May, the Labor Department and the FAR Council (overseers of contracting rulebook, “the FAR”) proposed how the President’s order would be implemented. It turns out, as with most things, the devil is in the details.

The proposed regulations require federal contractors and subcontractors to disclose violations of 14 federal labor laws and equivalent state laws from the previous three years. Exemptions were provided for companies with contracts valued less than $500,000. As proposed, prospective federal contractors would need to declare if they had labor violations in the previous three years when submitting an offer. During an initial evaluation, contracting officers would see that declaration (a simple “yes” or “no”), without any additional detail or explanation.

Later, if a contractor were likely to win an award, the contracting officer would have to decide if the contractor is a responsible company (a requirement of all government contracts already). It is in this phase that details like appeals, remediation, or mitigating factors could be explained. Contracting officers will attempt to identify companies with “serious”, “willful”, “repeated”, and/or “pervasive” violations and not award them contracts. Companies with minor violations could still be considered responsible and win contracts.

WIPP responded to the regulation during the public comment period expressing concerns with the new system and how it could negatively impact women-owned businesses, including those who had no history of unsafe or unfair work practices.

Notably, the proposals were incomplete as the Labor Department and FAR Council chose not to include what state labor law violations must be reported. It is impossible to gauge the impact of a regulation – the reason for comments– when missing significant portions.

What was in the proposals, however, was equally concerning. WIPP’s comment discusses how, in some cases, violations that require reporting will not be be fully adjudicated. That is, companies would have to report decisions against them that may ultimately be overturned – as nearly a third of NLRB decisions have been.

This is compounded by WIPP’s worry that simply having violations on record will “blacklist” companies without providing any opportunity to offer explanation. With limited resources and time, contracting officers may elect to avoid companies with any disclosed violations, despite the intent of the order to only bar violations of a certain severity.

The comment also considers burdens on subcontractors who similarly must report violation history, and the lack of resources the government may face to answer questions about weighing different labor violations. Moreover, the onus to collect and judge subcontractor violations falls to primes, a strategy the Labor Department itself questions.

WIPP’s final concern is that this rule is one of many in a disconcerting trend of new regulations that specifically target federal contractors. Earlier this year, regulations raised the minimum wage solely for workers on federal contracts. New requirements regarding sick leave are expected to come later this year. These make contracting with the federal government more onerous, particularly for women entrepreneurs seeking to enter the market.

Without question, WIPP supports efforts by the federal government to rid the contracting environment of businesses with a history of abusive and neglectful violations. In doing so, the government levels the playing field for the millions of businesses playing by the rules. But the proposals commented on will not achieve this goal. Instead, they will make it harder to be a contractor – pushing the innovative products and services of women-owned businesses out of the federal market.

Making the Affordable Care Act Work

ACAIn Washington, there are a few axioms on which almost everyone (Rs and Ds alike) can agree. Don’t hold events in August. If the meeting is important, take a cab, not the metro. Social media can be dangerous. And of course, no law is perfect.

The biggest law of the last decade, the Patient Protection and Affordable Care Act (a.k.a. “ACA” or “Obamacare” or “President’s Health Law”, and so on) is certainly a good example of the latter. The bill’s authors, President Obama, and more than just a few Congressional Republicans can agree on that. But that is no different than any other major policy change – they all undergo a period of fixes, tweaks, and changes usually addressing unintended consequences. Blame it on the nature of compromise, the mistakes of over-worked underpaid Hill staffers, or, I kid you not, typos.

If you read recent communications (or belong to the healthcare committee!) you will see that WIPP is supporting some of these changes to benefit women entrepreneurs. In our view, Obamacare is the law of the land* – but that doesn’t mean we cannot change it. Here are the tweaks we have supported recently:

Full Time is 40 Hours – Not 30

The Issue: Obamacare defined a full-time worker as working thirty hours a week. The definition matters for defining whether a business is exempt from the employer mandate (under 50 FTEs is exempt – yes, you have to add in part time employees, but good news: calculator). Just a refresher: if you have more than 50 FTEs and don’t offer health insurance, you may face penalties.

The Fix: The Save America’s Workers Act (creative license is allowed in bill names) changes 30 hours to 40 hours for the week calculation. WIPP supports the bill.

WIPP’s Position: A workweek is a workweek. Dolly Parton sang 9 to 5, not 10 to 4. The law used a thirty-hour definition in an effort to make the math (i.e. $$$) work. In addition, it was a tool to increase the number of low-hour workers that might receive employer-sponsored coverage. While increasing coverage is laudable, it should not have come at the expense of an arbitrary definition at odds with working America. The Obama Administration signaled opposition to the bill because it could undo some of the coverage gained in the past years. Whether or not this is true (wonks on both sides agree, the change would have little impact either way), the principle of the matter is simple: traditional definitions should not be upended on a whim. An American workweek is forty hours. Part-time workers, who also need coverage, should be addressed, but separately.

Bring Back HRAs

The Issue: Some very technical guidance from the IRS last fall removed a simple way for employers to help employees pay for health insurance premiums. Basically, a Health Reimbursement Arrangement, or HRA, let the employee find their own insurance and employers could reimburse employees at their discretion.

The Fix: Two options. One, the IRS could admit this was a bone-headed move and put out new guidance. Unlikely. Two, a few bills in the past Congress would allow HRAs to be allowed for businesses with fewer than 50 employees. WIPP is working with those offices in the new Congress. More to come.

WIPP’s Position: If it ain’t broke, don’t fix it. It worked in the past, now it’s broken. Someone should fix this (so to sum up: it wasn’t broken, the ACA broke it, now it needs a fix). HRAs can be a good part of a solution that gets more people covered. Often business owners look for the path of least resistance – for some businesses, HRAs can be that path. While WIPP reviews every comma of legislation before endorsing, WIPP would likely back legislation that made this change.

Expand Eligibility for the Small Business Tax Credit

The Issue: One of the small business carrots in Obamacare was the Small Business Health Care Tax Credit. But this carrot came with a lot of strings attached (mixed metaphors?). Currently, the tax credit is only available to businesses with fewer than 25 employees and average wages of less than $50,000. Moreover, to receive the full tax credit, which covers up to 50% of employer-paid premiums, businesses must have 10 or fewer employees and average wages of up to $25,000.

The Fix: Expand eligibility for the tax credit. Under the Small Business Tax Credit Accessibility Act, these restrictions would be relaxed to make businesses with up to 50 employees and average wages of up to $80,025 eligible for the tax credit. Additionally, it would extend the number of consecutive years a small business can claim the tax credit from two (current law) to three years. It also removes the requirement that employers claiming the credit contribute the same percentage of the cost for each employee’s health insurance.

WIPP’s Position: WIPP supports the bill. All these efforts stem from the idea that small businesses need help to provide coverage. Accessing that help should be easy, and not limited to a few businesses. We’ve heard from business owners nationwide saying that they simply don’t qualify under these strict requirements.

In a law that in size 8 font is nearly 1,000 pages, with thousands more in regulations**, there are more than three needed fixes. These are a few where WIPP members’ experiences drove us to advocate for these changes. Please let us know if any law is adversely affecting your business. It’s what we are here for.


*The Supreme Court is currently reviewing substantial portions of the law. Depending on their decision, this could all be a moot point.

**WIPP recently visited with Majority Leader Mitch McConnell’s office, which keeps a stack of the regulations, in case you wanted a visual.


John Stanford is part of WIPP’s Government Relations team in Washington, D.C., specializing in federal procurement and healthcare policy. When not bothering lawmakers about needed changes, he can be found in the woods at local golf courses.