Why you can’t afford not to offer health benefits
Originally posted January 14, 2014 by Larry Boress on https://ebn.benefitnews.com
The debate continues on the future of employer-based health benefits as employers continue to be challenged by the economy, the health care delivery system and changes resulting from the Affordable Care Act. There are some who believe this is the beginning of the end for employer-based health care benefits. I’m not one of them.
Why are employers still offering health care benefits and increasing worksite wellness activities? It’s not rocket science. Employers don’t offer benefits because they are altruistic. They do so primarily to recruit and retain talent and to ensure workers have the mental and physical capacity to perform their best on the job.
With benefits being the second highest expense after payroll, and the foreboding 2018 excise (“Cadillac“) tax on benefits above a certain dollar level, there is a great need for employers to reduce their outlay for medical expenses. Businesses are addressing this in multiple ways, including increasing programs to identify disease and health problems early in their progress and to reduce the risks for those with chronic conditions.
Employers have increased deductibles and co-pays of their health benefit programs, with close to 30% now offering only health savings accounts and health reimbursement accounts. In a new development, according the Private Exchange Evaluation Collaborative, close to half of all employers will be considering using private health insurance exchanges to offload their benefit administrative costs, while still offering benefits to their employees.
Increasingly, we also find employers are taking a deeper dive into providing direct health programs and services to their covered populations to respond to a health system that fails to offer easy access, effectively focus on prevention or management of chronic conditions and one that doesn’t incentivize individuals to take responsibility for own their health.
The nonprofit National Association of Worksite Health Centers found that close to a third of employers today make medical services available onsite so they are easily accessible to their employees. This allows them to reduce costs while minimizing lost work time due to absenteeism
The existence or even the unlikely repeal of the ACA does not change the value of offering benefits for employers. When you look at Europe, where many countries do not offer health benefits to their citizens, you still find companies offering wellness and preventive services to keep people safe, healthy and productive.
In surveys conducted by the Midwest Business Group on Health, the vast majority of employers agree that there is a link between an employee’s health and their productivity. They believe that health benefits are a necessary cost of doing business and view health benefits as an investment in human capital with measurable outcomes, not just an expense against the bottom line.
If employers are to remain attractive to new talent and retain their existing human capital, they will need to continue to offer health benefits to their workforces. But to do so, businesses must develop comprehensive, integrated strategies that reduce their costs and make employees more responsible for decisions they make about their medical care.
Many employers have already begun to move in this direction by increasing use of outcome-based incentives to motivate lifestyle choices, encouraging use of preventive care, and paying only for high quality providers and high-value, cost-effective treatments and services.
At the end of the day, dropping health care coverage is not an option, especially for employers who are focused on the health and productivity of their workforce. An employer-based system can and should continue if we recognize the value of our human capital being as important as the technology, machinery and plants that develop our products. Regardless of a company’s size, in a global marketplace, a business can’t afford to lose its most important assets – its people.
6 voluntary trends and opportunities for 2014
Originally posted on https://eba.benefitnews.com
Experts in the voluntary field share predictions for the coming year — and some pretty crazy products that can now be sold through payroll deduction. Comments compiled at SourceMedia’s Workplace Benefits Transitions conference in Chicago Dec. 10-12
Voluntary overall
“[Voluntary] prospects are outstanding because change brings opportunity. Not only today, but going into the future, it’s going to present a lot of great opportunities for us,” said Charlie Grim, sales manager at The BenefitSource in Elmhurst, Ill. While conference co-chair Walter Podgurski noted that Gil Lowerre, president of Eastbridge Consulting and leading expert in voluntary research, has predicted that 2014 will once again be a banner year for the products with health reform fully in place.
Long-term care
Technology
IRS eases same-sex health care tax break rules
Originally posted December 17, 2013 by Allen Greenberg on https://www.benefitspro.com
Thanks to last-minute action by the IRS, employee benefits administrators this year will have one more important change to communicate to employees as soon as possible: legally married same-sex couples can claim tax benefits this year if they’re enrolled in a flexible spending account, health care savings account or cafeteria plan.
The IRS – responding to the Supreme Court’s ruling in June invalidating part of the Defense of Marriage Act – said plans also are able to allow a midyear election change for participants marrying a same-sex spouse after the so-called Windsor decision.
Although it’ll mean more work, IRS Notice 2014-1 shouldn’t be a big surprise to HR managers. In August, the government said same-sex couples will be viewed as married for federal tax purposes, regardless of whether their marriages were recognized by the state in which they lived.
Carol Calhoun, a Washington, D.C., based attorney and former IRS official, said employers will need to move quickly to take advantage of relief granted under the latest guidance.
Calhoun said employees can use benefits remaining in their 2013 FSA accounts for same-sex spousal benefits, even in the case of FSAs set up as self-only FSAs.
“This information obviously needs to be communicated to those responsible for processing FSA benefits,” she said in a post on her firm’s website.
Employers, she wrote, also can now correct inadvertent overwithholding or underwithholding due to the recognition of an employee’s marital status, “but only if they act quickly to do so before the end of the year.”
The IRS notice will affect the amount reportable as income on W-2s, she said, so it’s important for HR departments to be aware of the new guidance as soon as possible.
Retirement plan sponsors are still awaiting IRS guidance on whether they will be compelled to retroactively apply the DOMA decision in calculating spousal and other benefits to same-sex partners.
Here are excerpts from the latest notice, offered by the IRS in Q&A form:
Question: If a cafeteria plan participant was lawfully married to a same-sex spouse as of the date of the Windsor decision, may the plan permit the participant to make a mid-year election change on the basis that the participant has experienced a change in legal marital status?
Answer: Yes. A cafeteria plan may treat a participant who was married to a same-sex spouse as of the date of the Windsor decision (June 26, 2013) as if the participant experienced a change in legal marital status for purposes of Treas. Reg. § 1.125-4(c).
Accordingly, a cafeteria plan may permit such a participant to revoke an existing election and make a new election in a manner consistent with the change in legal marital status. For purposes of election changes due to the Windsor decision, an election may be accepted by the cafeteria plan if filed at any time during the cafeteria plan year that includes June 26, 2013, or the cafeteria plan year that includes December 16, 2013.
A cafeteria plan may also permit a participant who marries a same-sex spouse after June 26, 2013, to make a mid-year election change due to a change in legal marital status.
Q: May a cafeteria plan permit a participant with a same-sex spouse to make a midyear election change under Treas. Reg. § 1.125-4(f) on the basis that the change in tax treatment of health coverage for a same-sex spouse resulted in a significant change in the cost of coverage?
A: A change in the tax treatment of a benefit offered under a cafeteria plan generally does not constitute a significant change in the cost of coverage for purposes of Treas. Reg. § 1.125-4(f). Given the legal uncertainty created by the Windsor decision, however, cafeteria plans may have permitted mid-year election changes under Treas. Reg. § 1.125-4(f) prior to the publication of this notice.
Q: When does an election made by a participant in connection with the Windsor decision take effect?
A: An election made under a cafeteria plan with respect to a same-sex spouse as a result of the Windsor decision generally takes effect as of the date that any other change in coverage becomes effective for a qualifying benefit that is offered through the cafeteria plan.
With respect to a change in status election that was made by a participant in connection with the Windsor decision between June 26, 2013 and Dec. 16, 2013, the cafeteria plan will not be treated as having failed to meet the requirements of section 125 or Treas. Reg. § 1.125-4 to the extent that coverage under the cafeteria plan becomes effective no later than the later of (a) the date that coverage under the cafeteria plan would be added under the cafeteria plan’s usual procedures for change in status elections, or (b) a reasonable period of time after Dec. 16, 2013.
The rules set forth (in the questions above) are illustrated by the following examples:
Example 1. Employer sponsors a cafeteria plan with a calendar year plan year.
Employee A married same-sex Spouse B in October 2012 in a state that recognized same-sex marriages. During open enrollment for the 2013 plan year, Employee A elected to pay for the employee portion of the cost of self-only health coverage through salary reduction under the cafeteria plan. Employer permits same-sex spouses to participate in its health plan. On Oct. 5, 2013, Employee A elected to add health coverage for Spouse B under Employer’s health plan, and made a new salary reduction election under the cafeteria plan to pay for the employee portion of the cost of Spouse B’s health coverage. Employer was not certain whether such an election change was permissible, and accordingly declined to implement the election change until the publication of this notice.
After publication of this notice, Employer determines that Employee A’s revised election is permissible as a change in status election in accordance with this notice. Employer enrolls Spouse B in the health plan as of Dec. 20, 2013, and begins making appropriate salary reductions from the compensation of Employee A for Spouse B’s coverage beginning with the pay period starting Dec. 20, 2013. The cafeteria plan is administered in accordance with this notice.
Example 2. Same facts as Example 1, except that Employee A submitted the election to add health coverage for Spouse B under Employer’s cafeteria plan on Sept. 1, 2013. Prior to publication of this notice, Employer implemented the election change and enrolled Spouse B in the health plan as of Oct. 1, 2013, and began making appropriate salary reductions from the compensation of Employee A for Spouse B’s coverage beginning with the pay period starting Oct. 1, 2013. The cafeteria plan was administered in accordance with this notice.
Q: How does the Windsor decision affect the tax treatment of health coverage for a same-sex spouse in the case of a cafeteria plan participant who had been paying for the cost of same-sex spouse coverage on an after-tax basis?
A: In the case of a cafeteria plan participant who elected to pay for the employee cost of health coverage for the employee on a pre-tax basis through salary reduction under a cafeteria plan and also paid for the employee cost of health coverage for a same-sex spouse under the employer’s health plan on an after-tax basis, the participant’s salary reduction election under the cafeteria plan is deemed to include the employee cost of spousal coverage, even if the employer reports the amounts as taxable income and wages to the participant. Accordingly, the amount that the participant pays for spousal coverage is excluded from the gross income of the participant and is not subject to federal income or federal employment taxes. This rule applies to the cafeteria plan year including Dec. 16, 2013, and any prior years for which the applicable limitations period under section 6511 has not expired.
Be careful about what constitutes affordable care
Originally posted December 13, 2013 by Keith R. McMurdy on https://eba.benefitnews.com
When considering what constitutes affordable coverage under the Affordable Care Act, some employers have come to me and said “Well, I will just charge everybody 9.5 percent of employees’ pay.” And on its face, that seems to be what the rule permits. But, as with other components of the ACA, Congress may have overlooked that our old friend ERISA already has a little something to say about what employees can be charged as a contribution.
Generally, ERISA does not require plans to provide the same benefit coverage to all employees. But the plan’s offerings have to be made in a manner that is non-discriminatory. HIPAA makes it illegal to charge different contributions to employees based on health factors. Specifically, an employer cannot charge some employees more than any other similarly situated individuals based on medical conditions, claims experience, receipt of health care services, genetic information or disability. But HIPAA does allow an employer to make other distinctions in benefits that are offered in the cost to employees, provided the distinctions are not discriminatory.
In order to avoid discrimination, plans have to limit their distinctions between employees to “bona fide employment-based classifications.” The most common examples are things like full-time or part-time status, geographic locations and salaried versus hourly employees. In some instances, it may even be permissible to charge different rates based on time of service, but employers have to be wary of age discrimination rules. However, what is clear is that the plan has to define the rules and explain how the rules apply to each classification of employee.
What employers should be considering as they prepare their compliance program for 2015 is how they define these job classifications. For example, take two employees who do the exact same job, but one makes $10 per hour and the other makes $10.50 per hour simply because they have been employed a year longer. If the employer charges both of these employees 9.5% of their wages for health insurance contributions, there would be discrimination between them because they are similarly situated employees being charged two different rates for the same benefit coverage. Absent plan rules that explain the distinction, this difference in contributions would be discriminatory and arguably impermissible under ERISA.
So before assuming that everyone can be charged 9.5% of box 1 of their W-2s, consider what ERISA already has in place. It is not that it can’t be done this way, it is only that it has to be done properly, with the right plan language and with the correct limits in place. The ACA compliance is also ERISA compliance and employers should seek assistance for staying in line with both.
The information in this Legal Alert is for educational purposes only and should not be taken as specific legal advice.
States to decide which plans are PPACA-compliant
Originally posted November 21, 2013 by Arthur D. Postal on https://www.lifehealthpro.com
States will be the ultimate determinant as to whether they will allow insurers to renew existing health insurances plans in 2014 even though these policies may not comply with the new Affordable Care Act, President Obama and state insurance regulators agreed at a White House meeting last night.
The meeting with several insurance commissioners and Ben Nelson, chief executive officer of the National Association of Insurance Commissioners, was held as the White House continued itsefforts to smooth the troubled political waters caused by the rocky rollout of the federal exchange that will be used by residents of 36 states to buy individual and small group policies mandated by the law.
The state regulators used the occasion to raise other issues with the president, including their relationship with federal insurance regulators given a voice in insurance regulation left to the states for 150 years. A major issue brought up with the president was the role they want to play in establishing international insurance standards.
As for the healthcare, law, under the Patient Protection and Affordable Care Act, everyone must have health insurance by March 31, 2014, or pay a penalty. However, the exchange website unveiled Oct. 1 has proved unequal to its task, and there are questions whether it will be fully up to speed by the end of the month, as promised by the administration.
The inability of people to access the website, plus the realization that the president’s commitment to allow everyone to “keep their existing policies if they like them” contradicts the law’s mandate that each insurance policy must contain certain essential benefits, has generated a major political problem for the president.
These essential benefits include providing insurance to people with pre-existing conditions, free preventative care, maternity coverage and other benefits. Also included is a requirement to provide contraceptives for women.
However, the realization that most existing policies didn’t include such benefits created a major practical problem as insurers notified thousands of affected consumers that their existing policies would be cancelled.
As the meeting was being held, CareFirst BlueCross Blue Shield, which serves Maryland, announced that it would allow more than 55,000 policyholders to retain their policies for one year even though the policies don’t contain some of the essential benefits mandated by the new law. CareFirst acted one day after the Maryland insurance commissioner said he would approve such action. Other health insurers in the state said they would also do so; others said they would not.
Other states, like Florida, said they would also allow consumers to keep their existing policies for one year. But, others, like New York, Washington and Indiana, said they would not comply. CaliforniaInsurance Department officials said they would announce their decision today.
At the meeting, the state insurance regulators emphasized their concern that different rules for different policies would be detrimental to the overall insurance marketplace and could result in higher premiums for consumers, without addressing the underlying concern of gaps in coverage. They also emphasized the importance of deferring to the states to protect consumers, and highlighted the track record of effective regulation by insurance departments across the country.
However, they acknowledged that they are just standard-setters, not policymakers and reiterated, as stated by Jim Donelon, NAIC President and Louisiana insurance commissioner, that PPACA is “the law of the land."
“Since the passage of ACA, state regulators have been working to ensure that plans are compliant with the new rules,” Donelon said at the meeting.
He said the proposed changes announced by the president in an executive order last Thursday in response to the uproar over the cancellations and the difficulty consumers are having buying policies on the federal website has creating “a level of uncertainty that we must work together to alleviate.”
Donelon made clear, however that state regulators “share the President’s goal of affordable coverage for consumers, and we will work with the insurance companies in our states to implement changes that make sense while following our mandate of consumer protection.”
Donelon attended the meeting with NAIC Chief Executive Officer Senator Ben Nelson, Connecticut Insurance Commissioner Thomas B. Leonardi, and North Carolina Insurance Commissioner Wayne Goodwin.
The group discussed practical implications of implementing the delay in enforcement as well as outstanding questions regarding what specific provisions would be impacted, and talked to reporters at length at what was accomplished at the meeting in a conference call afterwards.
Amongst the presidential aides attending the meeting was Kathleen Sebelius, secretary of the Department of Health and Human Services. Sebelius and officials of the Centers of Medicare and Medicaid Services, which oversaw development of the website, have been under intense fire because the website has failed because of the huge numbers of people who sought access to it, and because testing designed to prove it worked was not even started until a week or so before the Oct. 1 rollout.
The White House released a statement saying the state regulators had been given full authority as to whether to accept the grandfathering. According to the statement, Obama said that his executive order requires that health plans that offer such renewals provide consumers with clear information about consumer protections lacking in those plans and their options and possible tax credits through the exchanges. The statements said that Obama acknowledged that, “States have different populations with unique needs, and it is up to the insurance commissioner and health insurance companies to decide which insurance products can be offered to existing customers next year.”
Additionally, according to the White House statement, the president emphasized that he wants to hear any ideas that insurance commissioners “may have as implementation continues to ensure that Americans across the country have the information they need to get affordable, quality coverage for themselves and their families.”
8 things employers must do to comply with post-DOMA rules
Originally posted November 21, 2013 by Paula Aven Gladych on https://www.benefitspro.com
Employers need to ensure their retirement plans are in compliance with new rules regarding same-sex marriage.
With the Supreme Court’s decision in June to strike down a key provision of the Defense of Marriage Act allowing the federal government to recognize same-sex marriages and subsequent clarification by the IRS and the Department Labor, many plan sponsors now have to recognize same-sex couples when it comes to retirement benefits.
Only 14 states and the District of Columbia allow same-sex marriage. But according to new rules which went into effect in mid-September, same-sex couples are entitled to all of the federal rights entitled to opposite sex couples, including workplace benefits —even if the couple resides in a state that doesn’t recognize same-sex marriage.
According to Laura Pergine and Janet Luxton of Vanguard Strategic Retirement Consulting, there are eight things plan sponsors must do to make sure their retirement plans are in compliance post-DOMA:
1. Review plan documents.Vanguard recommends that plan sponsors sift through plan documents to determine if there is a definition of “spouse.” If a definition is there, they need to make sure it is compliant. The company said that plan sponsors also should review provisions in their documents that refer to domestic partnerships or civil unions.
2. Review marital status when it comes to beneficiary determination. If a plan participant who is legally married to a same-sex spouse dies, but his beneficiary designation is for someone he isn’t married to, that person may not receive the promised benefits unless the same-sex spouse waives his spousal rights.
3. Review qualified domestic relations procedures.Legally married same-sex couples have the same rights and obligations as opposite-sex couples if their marriage is dissolved. Qualified Domestic Relation Order procedures need to be reviewed to make sure there are no gender-specific references. If there are, they should be removed, Vanguard said.
4. Hardship withdrawals for same-sex spouses are now available.Plan sponsors need to follow the same rules regarding hardship withdrawals as those that apply to opposite-sex spouses.
5. Required minimum distributions.Gender-specific references to required minimum distributions in plan documents need to be removed. Spouses have more options regarding the treatment of distributions received as beneficiary payments.
6. Gender-specific references to rollovers in plan documents or distribution forms need to be removed. Spouses have more flexibility than non-spouses in how they treat rollover distributions, according to Vanguard.
7. Gender-specific references should be eliminated from participant communications. Plan sponsors should consider targeted communication to those employees most likely affected by these changes. Same-sex couples should be reminded to update their beneficiary designations.
8. Previous payment/Denial of benefits based on marital status. The IRS plans to issue guidance on whether or not same-sex couples who were denied an annuity benefit prior to the DOMA decision can now receive that benefit because of the Supreme Court decision.
Offering Benefits Still Gives Employers a Competitive Advantage
Originally posted November 14, 2013 on www6.lexisnexis.com
Employee Benefit Research Institute issued the following news release:
The vast majority of workers say that the benefits package an employer offers x{2015} especially health insurance x{2015} is important to their decision to accept or reject a job, but a quarter are not satisfied with them, according to a new survey.
More than three-quarters of employees state that the benefits package an employer offers prospective employees is extremely (33 percent) or very (45 percent) important in their decision to accept or reject a job, according to the 2013 Health and Voluntary WorkplaceBenefits Survey (WBS), by the nonpartisan Employee Benefit Research Institute (EBRI) and Greenwald and Associates.
Nevertheless, 31 percent are only somewhat satisfied with the benefits offered by their current employer, and 26 percent are not satisfied.
Workers identify lower cost (compared with purchasing benefits on their own) and choice as strong advantages of voluntarybenefits. However, they are split with respect to their comfort in having their employer choose their benefits provider, and think the possibility that they may have to pay the full cost of any voluntary benefits is a disadvantage.
Workers continue to rank health insurance as the first or second most important benefit provided by employers: 88 percent of employees report that employer-provided health insurance is extremely or very important, far more than for any other workplacebenefit, the WBS found.
"Employee benefits continue to be important to workers," said Paul Fronstin, director of EBRI's Health Research and Education Program and co-author of the report. "Employers that offer a strong employee benefits package should find themselves with a competitive advantage over other companies when it comes to attracting and retaining desirable employees."
As the EBRI report notes, benefits coverage in the workplace, including health insurance, is far from universal. Three-quarters ofemployees (7 6 percent) report their employer offers them health insurance. Two-thirds each indicate they are offered dentalinsurance (67 percent) or a retirement savings plan (66 percent), and more than half say they are offered vision insurance 60 percent), life insurance (58 per cent), and short-term disability insurance (5 5 percent) by their employer. About half are offered long-term disability insurance (49 percent) and accidental death and dismemberment insurance (48 percent).
However, just 38 percent report being offered a traditional pension or defined benefit plan, and only one-quarter (25 percent) are offered long-term care insurance. Fewer report being offered retiree health insurance (22 percent) or other non-core ancillary benefits.
The full report, "Views on the Value of Voluntary Workplace Benefits: Findings from the 2013 Health and Voluntary WorkplaceBenefits Survey," is published in the November EBRI Notes, online at www.ebri.org
More mid-market employers eligible for group voluntary benefits plans
Originally posted November 03, 2013 by Joanne Wojcik on www.businessinsurance.com
Many mid-market employers that previously could offer voluntary products to employees only on an individual or multi-life basis may now be eligible for group plans.
Perhaps the only exception is long-term care insurance, which is available primarily on an individual basis due to the recent spate of insurer withdrawals from the group LTC market.
“Now many insurers are offering voluntary benefit products on a group basis to make it possible to enroll on self-serve platforms,” said Bruce Sletton, senior vice president and national elective benefits practice leader at Aon Hewitt in Dallas.
“The trend has been toward group insurance products in the voluntary space,” said Beth Grellner, St. Louis-based co-chair of Towers Watson & Co.'s national voluntary benefits and services group. “For the third year in a row, we've seen group insurance (voluntary benefits) grow at a faster rate than voluntary products offered on an individual basis.”
Group voluntary benefits provide guaranteed issue, regardless of employees' health status or age, and often come at a lower price than if the benefits been underwritten on an individual basis.
The downside, however, is that group products are guaranteed to be renewable only on a one-, two- or three-year basis, Mr. Sletton said. “The insurer has the right to review the products and then make price adjustments,” or drop the group altogether, he said.
IRS Releases Tax Benefit Inflation Adjustments for 2014
Originally posted https://www.ifebp.org
Internal Revenue Service (IRS) Revenue Procedure 2013-35 provides the cost-of-living adjustments to certain items for 2014 as required under the Internal Revenue Code. This revenue procedure includes updates for numerous items including:
Adoption Assistance Programs
For taxable years beginning in 2014, under § 137(a)(2) the amount that can be excluded from an employee’s gross income for the adoption of a child with special needs is $13,190. Under § 137(b)(1) the maximum amount that can be excluded for amounts paid or expenses incurred by an employer for qualified adoption expenses furnished through an adoption assistance program for other adoptions by the employee is $13,190. The amount excludable from gross income begins to phase out for taxpayers with modified adjusted gross income in excess of $197,880 and completely phases out with modified adjusted gross income of $237,880 or more.
Health Flexible Spending Arrangements (Health FSA)
The Affordable Care Act amended § 125 to provide limitations on Health FSAs. The dollar limitation on voluntary employee salary reductions for a health FSA is adjusted for inflation for taxable years beginning after December 31, 2013. For taxable years beginning in 2014, the dollar limitation is $2,500.
Medical Savings Accounts
- Self-only coverage. For taxable years beginning in 2014, the term "high deductible health plan" as defined in § 220(c)(2)(A) means, for self-only coverage, a health plan with an annual deductible not less than $2,200 and not more than $3,250, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $4,350.
- Family coverage. For taxable years beginning in 2014, the term "high deductible health plan" means, for family coverage, a health plan with an annual deductible not less than $4,350 and not more than $6,550, and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $8,000.
Qualified Transportation Fringe Benefit
For taxable years beginning in 2014, the monthly limitation under § 132(f)(2)(A) regarding the aggregate fringe benefit exclusion amount for transportation in a commuter highway vehicle and any transit pass is $130. The monthly limitation under § 132(f)(2)(B) regarding the fringe benefit exclusion amount for qualified parking is $250.
Cost of benefits, ACA compliance main concerns of midsized businesses
Originally posted by Andrea Davis on https://ebn.benefitnews.com
The cost of health coverage, the Affordable Care Act and the volume of government regulations are the top three concerns of midsized business owners and executives, according to a new survey from the ADP Research Institute.
Seventy percent of midsized businesses – those with between 50 and 999 employees – surveyed said their biggest challenge in 2013 is the cost of health coverage and benefits. ACA legislation came in as the No. 2 concern, cited by 59%, a 16% increase over last year. And rounding out the top three list of concerns was the level and volume of government regulations, cited by 54%.
“What was a surprise to us was that midsized business owners’ level of confidence in their ability to comply with the laws and regulations doesn’t reflect reality,” says Jessica Saperstein, division vice president of strategy and business development at ADP.
For example, the survey finds that, overall, 83% of midsized businesses are confident they’re compliant with payroll tax laws and regulations, nearly one-third reported unintended expenses – fines, penalties or lawsuits – as a result of not being compliant.
“The majority say they’re confident but many of them are experiencing these fines and penalties,” says Saperstein. “On average, it’s about six times a year and the average cost of one of these penalties or fines is $90,000.”
Nearly two-thirds of benefits decision-makers at midsized companies are not confident they understand the ACA and what they need to do to be compliant. Ninety percent aren’t confident their employees understand the effects of the ACA on their benefits choices.