Health care reform relies on new laws as well as laws that have been on the books for years … Small business owners face hefty fines, penalties and taxes for non-compliance … The IRS and the Department of Labor are hiring thousands of new auditors …
Read between the lines. Unless small business owners take a proactive approach to health care reform compliance, they are the ones who will pay for it.
This month, two small business executives and a small business advocate share their thoughts and advice about The Affordable Health Care Act widely known as Obamacare. They are among a small but growing group of small business executives who have ensured their organizations are compliant with the reporting and notification requirements of the Employee Retirement Income Security Act, the Consolidated Omnibus Budget Reconciliation Act, the Family and Medical Leave Act and new and upcoming federal health care reforms mandated by Obamacare.
Mel Hays, Founder and Executive Director
Chesapeake Business Alliance
Mel Hayes is an insurance professional turned third-party administrator turned small business advocate, career adjustments he made in response to evolving state and federal health care legislation. He is executive director of the Chesapeake Business Alliance, a Hunt Valley-based association modeled after the AARP that advocates for small business, offers tax-advantaged wrappers for health insurance plans and extends a suite of health care reform compliance programs.
Joyce Duffy, Executive Director
Harford Family House
Joyce Duffy is executive director of Harford Family House, the county’s largest provider of transitional housing for homeless families with children, and the only organization capable of keeping an intact family, including a father, together during the crisis of homelessness. Duffy oversees 38 housing units, manages seven full-time and two part-time employees, supervises client education and leads the organization’s fundraising and advocacy programs.
Jim Lockwood, Co-Founder and President
The Lockwood Group
Jim Lockwood co-founded The Lockwood Group in 2010 with a focus on helping to modernize, sustain and field C4ISR systems in support of the Warfighter. Jim is a Business Entrepreneur with a successful background in providing technical and engineering solutions for federal government and commercial entities. The Lockwood Group is headquartered at Aberdeen Proving Ground and employs 14 people in two states.
Denial isn’t an option
Many small business owners have taken a wait and see approach to health care reform. Wait and see who wins the presidential election. Wait and see if Congress will make changes. Wait and see if other businesses take this seriously. The wait is over and the handwriting is clearly visible on the proverbial wall.
“I think it’s not worth taking the risk. I have a fiduciary responsibility to protect this organization to serve homeless families in the community. We are compliant and transparent and doing so in the best possible way,” Duffy says.
Lockwood, whose business is also fully compliant, concurs. “The important piece is to be proactive and disciplined now. That will ultimately eliminate the need to continually ‘stay complaint’ and ultimately save my business money.”
Compliance is more than a big stick
As a small business advocate, Hays’s perspective extends beyond his own organization.
“You have ERISA, a federal law enacted in 1974 that gives federal government oversight for employer health plans. They never did much with employers with fewer than 100 employees, even though compliance was required. Now you have health care reform with mandatory compliance for employers and some individuals, effective March 23, 2010, Hays says.
“We think compliance was placed into Obamacare to help fund the cost of health care reform. The Department of Labor and the IRS are hiring thousands of auditors. Any act of non-compliance could trigger an audit,” Hays says, noting as an example that employer fines imposed by the Department of Health and Human Services could be as high as $1,000 for any and each willful failure to provide an ERISA Qualified Summary Plan Description to employees. In addition, the IRS can impose fines on employers of up to $100 per day for each affected employee. “The cost of non-compliance could be excessive and possibly devastating to many businesses.”
Tap available resources
“When I heard about all the compliance regulations, I thought ‘We don’t have the time or the resources to dedicate to becoming compliant,’” says Duffy.
Both Duffy and Lockwood called on experts outside their organizations for help.
“Your best expert is the company currently supporting your health care program for your employees. They should be experts on this topic and, if they are not, you should consider hiring someone who is. We typically consult with experts when needing education on new regulations or compliance. Hire an expert who is versed in the regulation who can help you build the processes early,” Lockwood says.
“We provide our employees life insurance, AFLAC, Blue Cross/Blue Shield. We worked with Innovative Insurance Solutions to coordinate with all the providers to make sure we were complaint. They then prepared a bound document to give to each employee that explains their benefits in detail and very clearly,” Duffy says.
Groups like the Chesapeake Business Alliance have built websites that connect small business owners to educational seminars, service providers, websites and podcasts that explain The Affordable Care Art.
Duffy subscribes to a service that will notify her of and provide her with newly required notices and documents. She says, “Any new documents will be provided to employees to add to the binders they have been provided and instructed to keep.”
Small business owners should touch base with their insurance broker, accountant and attorney to ask about health care reform compliance. If they aren’t knowledgeable, consider replacing them with professionals who keep themselves current with evolving regulations and help their clients take proactive approaches to compliance.
“Our message is that we have a different landscape developing with health care reform. There are issues employees need to know about here that can be addressed and corrected, as long as trusted advisers understand what the issues are and how to correct them,” Hays says. “If not corrected, these can cost them a lot of money in penalties and taxes.”
Next, educate yourself. The best place to start is www.dol.gov/ebsa, a website published by the U.S. Department of Labor’s Employee Benefits Security Administration. Another immediate resource is published by the Internal Revenue Service at www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions.
“For any new regulation, it is challenging for businesses to adjust to the additional layer of compliance, not only a monetary investment but time spent away from core business activities,” Lockwood says. “Implementing Obamacare will be no different, though the regulation is still in the early stages. I anticipate the pains to be felt years down the road.”