Hardware stores tackle tough topic: Healthcare reform

It’s complicated. The 2,560-page Patient Protection and Affordable Care Act invites employers with 50-or-more employees to pay or play.

Orlando, Fla. — A funny thing happened on the day of a healthcare reform seminar. 

A Florida judge ruled that the reform itself is unconstitutional. There you have it: another wrinkle in the already extremely complicated healthcare debate. 

The seminar at the True Value Co. Spring Market was designed to help hardware store owners better understand the impact of a massive reengineering of the nation’s healthcare system. The breaking news didn’t stop the presenters from high-powered consulting firm Towers Watson from breaking down the building blocks of healthcare reform in its presentation, “How Health Care Reform Will Affect Your Business.” And they didn’t seem too worried about the judge’s ruling. 

Regina Ihrke, consultant with Towers Watson, requested that the audience of about 30 True Value members here at the co-op’s Spring Market feel free to participate and ask questions. There was no need for the encouragement. The questions began to fly at the PowerPoint’s innocuous first slide.

Some of the specific queries from the audience simply didn’t have an easy answer. For instance:

• In order to figure out a company’s number of employees, how does one count part-timers? This is an important point for companies at or near the 50-employee level.

• How does an employer determine family income? This is another crucial consideration because employees must be offered “affordable” insurance, defined as 9.5% of family income.

On both counts, more guidance is expected, Ihrke said.

Big changes 

Health Care Reform is the all-encompassing phrase for the combination of the Patient Protection and Affordable Care Act (PPACA), enacted March 23, 2010; and the Health Care and Education Reconciliation Act (HCERA), enacted a few days later.

“Health Care Reform is the most significant change in employee benefits, access to health care and affordability, since Medicare began in the 1960s,” said Ihrke, of Towers Watson, the firm whose clients include McDonalds as well as True Value.

One of the critical new phrases introduced by the legislation is “pay or play.” Ihrke explained that companies with 50 or more employees will have a choice: offer affordable healthcare coverage (play), or face a $2,000 per employee fine (pay) and turn employees over to yet-to-be-created Health Benefit Exchanges for coverage.

The Health Benefit Exchanges become operational in 2014.

The short-term challenges, according to Ihrke, are understanding the new law and its implications and implementing immediate provisions. In the long term, the challenge is to manage compensation and benefit programs in the new environment. 

For Phil Jarriel of Handy Andy with five locations in Georgia and about 85 employees, planning for the impact is exasperating. 

“The rules haven’t been set, we don’t know what the guidelines are; we don’t know what the parameters are,” he said. “You try to follow the guidelines they have set and navigate as best you can.”

From a pure, expense-control perspective, there seems to be incentive to push employees over to the Health Benefit Exchanges, Jarriel said. “But, hey, guess what? The insurance pools aren’t mandated and aren’t in place. So that may not be an option.”

Indeed, the question of whether to pay or play will loom large for businesses, according to Ihrke. One factor is the age of the work force. “Every employer is different,” she said. “And at the age of 50 and the age of 40, the cost levels for an employee are very different.”

A key feature of the reform — and the feature that bothered the judge in Florida — is the individual health coverage mandate. This means all individuals are required to enroll in basic health coverage or pay a penalty of $700 a year. This mandate also begins in 2014, but just how this will be tracked and enforced is unclear, Ihrke said. The idea is that massive participation in insurance pools will lower costs.

But many remain skeptical. “We would definitely call this ‘healthcare insurance reform,’ not healthcare cost reform,” Ihrke said. e

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