Given the sweeping changes the Affordable Care Act (ACA) has made to the insurance market, along with the wall-to-wall media coverage these changes have received, it is more important than ever for your company to communicate effectively with your workforce regarding their costs and coverage under your ACA plans. Seize the opportunity to be the primary source of information with regard to employee benefits as health insurance details change from year to year.
Start With What’s Staying the Same
If your company offered health insurance coverage before the ACA’s implementation, then there’s a chance the law hasn’t had a major effect on your employees thus far. By first focusing on everything that isn’t changing, you will be able to establish a tone of stability and calmness in a discussion that may have some people fraught with anxiety.
Highlight Positive Changes
Next, focus on any ACA-related changes that your employees will view as positive. For example, ACA plans must allow children to stay on their parents’ plan until they reach age 26, a rule that could help a lot of families. If your company has adopted a wellness program that provides incentives to employees, this might also be something you want to highlight. Finally, it can be worth emphasizing the increased access to preventive services that the ACA requires, including free mammograms, colonoscopies, immunizations and other services designed to address health problems before they become serious and more costly.
By leading with the positive changes, you’ll soften the blow of any increased costs by framing them in the context of greater benefits.
Pivot to Any Negative Changes
If your employees are experiencing a rise in health care costs under your plan, bring it to light as part of a general trend, not an isolated situation that only affects your workforce. A study by the International Foundation of Employee Benefit Plans found that more than 33 percent of companies have responded to the ACA by increasing their employees’ out-of-pocket maximums, in-network deductibles and/or portions of premium costs. The study similarly found that more than 20 percent of companies have raised the amount of employee co-payments or co-insurance for primary care, the employee portion of prescription drug costs and/or the employees’ responsibility for payment of dependent-coverage cost.
Be Honest About Uncertainties
The ACA is still new and unpredictable. Making promises or predictions about the effect it will have in future years risks eroding the trust of a workforce that relies on you for accurate and consistent information. When employees ask what they can expect in the future, explain that the company reevaluates its health insurance options on an annual basis and that any changes will be made with the best interests of both the company and its employees in mind.
Don’t Forget Your Own Required Communications
While it’s vital to maintain good morale through proper communications, companies would be remiss to do so at the expense of ensuring compliance with several communication steps actually required under the ACA:
- Summary of Benefits and Coverage (SBC) disclosure. Employers are required to provide employees with a standard Summary of Benefits and Coverage, designed to explain what the plan covers and what it costs. The SBC should enable employees to gain a better understanding and properly assess what their options are for buying health coverage. The U.S. Department of Labor has put together a complete FAQ on SBC disclosure.
- Reporting cost of coverage on Form W-2. Employers who offer “applicable employer-sponsored coverage” must report the cost of that coverage in Box 12 of each employee’s Form W-2. The primary purpose is to inform the employee of the total cost of health care, including the company contribution and employee payroll deductions.
- IRS Forms 1094-C and 1095-C. Employers with at least 50 full-time employees (or full-time-equivalents) are required to file Forms 1095-C (Employer-Provided Health Insurance Offer and Coverage) and 1094-C (accompanying transmittal form) with the IRS. A copy of Form 1095-C must also be delivered to each full-time employee. The IRS offers comprehensive information surrounding both Forms 1094-C and 1095-C.
What to Know for 2016
As 2016 begins, it’s important to remember that there are two key ACA components that take effect this year:
- Employer mandate coverage increases. During 2015, employers of 50–99 full-time employees (or full-time-equivalents) were not yet required to offer their employees ACA-compliant coverage. That changes in 2016: any employer in that employee number range must now meet the employer mandate.
- IRS forms. As discussed above, all employers subject to the employer mandate must file IRS Forms 1094-C and 1095-C. (Employers that sponsor self-insured plans must also file IRS Forms 1094-B and 1095-B.) The IRS recently released Notice 2016-4, which extends the deadlines for the reporting requirements. Statements to employees must now be provided by March 31, 2016, with copies to the IRS together with a transmittal form by May 31, 2016, if filed on paper (June 30, 2016, if filed electronically).
As always, remember that the ACA is a work in progress that has already seen several adjustments and modifications. Therefore, it’s essential to stay up to date and consult with your attorney, tax advisor (particularly with the new tax form requirements), health plan broker or other advisor regularly to make sure you have the latest news and information.
This content is provided solely for informational purposes. It is not intended as and does not constitute legal advice. The information contained herein should not be relied upon or used as a substitute for consultation with legal, accounting, tax and/or other professional advisers.
Avi Sinensky is an attorney at Meltzer, Lippe, Goldstein & Breitstone LLP in New York, where his practice focuses on corporate and employee benefits law. He advises clients on strategies to overcome Affordable Care Act challenges and to capitalize on related opportunities.