Nondiscriminatory ACA provisions could cost employersNews added by Benefits Pro on April 30, 2013
BenefitsPro

Benefits Pro

Joined: September 07, 2011

My Company

By Amanda McGrory-Dixon

Health care exchanges are getting all of the attention, but employers need to take a closer look at their benefits packages because the nondiscriminatory provision of PPACA have the potential to cost them a lot of money.

So says Jay Starkman, the CEO of Engage PEO, a human resources outsourcing organization.

Under the provision, employers can no longer give preferential treatment when it comes to benefit plans. Everyone must have the same benefit options. The new provision is set to go into effect in January 2014, though this could be delayed as more guidance is scheduled to come down.

“It doesn’t sound like a big deal, but when you take into account two very common practices that businesses have been following for years that would violate this provision, it really becomes meaningful, especially when you couple that with the penalties that are built into the act,” Starkman said.

In one case, an employer would violate this provision if it pays for a greater portion of benefits for C-suite employees than others, Starkman said.

Often, executives build agreements into their contracts that their benefits are covered at a higher level or their families might receive coverage while the spouses and children of everyone else working for the company are not.

Another practice that could get an employer into trouble is basing benefits on tenure, Starkman said.

As an employee builds years of service, some employers provide a more robust benefit offering. Although the intention may be to reward that employee for his or her service, it could lead to trouble under PPACA, and both of these instances come with stiff fines.

“If you have 101 employees in your company and one employee, the CEO, is getting all of his benefits paid for and the other 100 are not, those other 100 employees start accumulating a penalty at $100 a day, which comes to $10,000 a day,” Starkman said. “Now, there’s a cap on this at half a million dollars, but if you’re at a larger company that practices this for the entire C-suite, you could be at half a million dollars in a matter of days.”

Not every type of benefit is covered under this provision, which only applies to health care coverage, notes Bruce Elliott, manager of benefits and compensation for the Society of Human Resource Management.

Executives often have premium life and disability benefits, and those higher tiers are still allowed under ACA.

Originally published on BenefitsPro.com
The views expressed here are those of the author and not necessarily those of ProducersWEB.
Reprinting or reposting this article without prior consent of Producersweb.com is strictly prohibited.
If you have questions, please visit our terms and conditions
Post Press Release