A View from the ACA Frontlines
T he Affordable Care Act, aka Obamacare, is complex, extensive and headache-inducing.
Retail executives have repeatedly voiced concerns about the impacts the employer-mandate penalties will have on jobs, particularly as the law requires large employers to provide insurance to employees who work at least 30 hours per week.
The cost involved with implementation also raises worries among retailers who say the mandate threatens to erase already narrow profit margins and raise costs.
Neil Trautwein, NRF vice president and employee benefits policy counsel, is on the frontlines of this issue. Trautwein has repeatedly testified before Congress and government agencies about the challenges confronting retail companies as a result of the new regulations.
The decision announced in July to delay by one year the employer mandate provisions and provide employers more time to adapt their systems and improve compliance efforts was spurred, in part, by Trautwein’s efforts on behalf of NRF. Topping his current agenda is the contention that Congress should help mitigate the regulations’ adverse impact by redefining ACA full-time coverage eligibility to 40 hours per week.
STORES editor Susan Reda recently spoke with Trautwein.
What are the top concerns retail companies have about the Affordable Care Act?
The main concerns have always been, “How much does this cost? How do we get employees coverage? What role will employers have in providing that coverage?”
NRF has participated in this … from the outset. We established a CEO healthcare task force prior to the congressional debate and spent about a year and a half coming up with a retail platform for healthcare reform. Retailers face particular challenges in providing coverage to their workforce, [especially] to employees whose hours fluctuate over time. This specific challenge has served as the focus of NRF’s efforts post-enactment and in the regulatory implementation of the law.
Are the core benefits available under the ACA affordable for retailers?
The jury is still out ... . The proof will be revealed initially during enrollment [which began last month] as people sign up for coverage — or not — or in 2014 … and it will be exposed more distinctly in 2015 when the mandate for employers to provide coverage becomes applicable.
Most retailers operate on thin profit margins and find it very difficult to add labor cost to their payrolls. The danger here is the change to the nature of the retail work force because of the law’s definition of full-time at 30 hours. The question becomes, “Do you change the mix of your workforce between full- and part-time? Do you have fewer employees? What effect does that have?”
Are there certain types of retail companies that are likely to be more negatively affected by this?
We are all pretty much in the same boat. [These are] issues that had been established by retailers, such as how they defined full-time and determined eligibility for benefits. … If they have not previously provided benefits, it’s probably because their business model doesn’t support it. If they are providing benefits, they have to provide more expensive benefits and that’s going to be a challenge for them.
We worked with the Department of Treasury … to try to ease this question of hours that vary over time, and were pleased with their concept of … a “look-back.” Retailers can average hours over a set amount of time and if an employee reaches that 30-hour threshold, they get an equivalent period of coverage. This is the key challenge for retail because many of our employees don’t fit into neat full- and part-time boxes.
What must retailers do by January 1, and how does that compare with what they need to do a year from then?
October 1 [was] when retailers should have begun notifying employees about the healthcare marketplaces and exchanges. Also, they should make employees aware of potential subsidies. ...
There are a number of provisions … that will become effective on January 1, 2014. Many will have a negative effect on the cost of coverage. [Around June], if the retailer uses a calendar benefits year … [it] will have to start counting hours and tracking part-time employees more closely to determine if they reach 30 hours … .
According to the proposed regulations, the retailer will have to report to the Department of Treasury, the Department of Health and Human Services, the Department of Labor, their employees and 50 different state exchanges. This whole question of reporting and accounting for hours could rival the cost of penalties.
How can retailers get up to speed quickly?
They need to start by determining whether it’s applicable. If your company has 50 or more full-time employees, then it’s … potentially subject to penalties for not providing coverage or providing inadequate coverage. … If a company doesn’t get to the 50 full-time employee threshold on first analysis, it would then be asked to account for part-time hours, and that can boost it over that threshold — though companies are not charged for not covering these so-called equivalent employees.
Next, the company would need to assess the coverage they provide and whether it matches up to the requirements of the law. If it doesn’t provide coverage currently, does it want to begin or will the current penalty of $2,000 for every uncovered full-time employee (the ACA exempts the first 30 full-time employees from the calculation) make sense to limit the liability to the penalty amount?
How are the smaller mom-and-pop type businesses reacting to this law?
There are opportunities for smaller businesses. The exchanges or markets will offer new opportunities to purchase coverage and there are small business tax credits that … may help some.
It’s a very multi-faceted law … given the degree of interface with this multi-agency, multi-state apparatus, I wager that it will … not please many small mom-and-pop shops.
Is there any chance that there will be another delay or changes to the ACA that will make this more palatable for our industry?
The 30-hour issue could get some traction toward the end of this year. There’s always a chance, but I would not bet the store on additional delays.
My advice is to proceed as if this were going into effect as scheduled in 2014 and 2015, and prepare accordingly. We’re not out of the regulatory swamp.
To what extent might the ACA mandate have an impact on job growth?
It boils down to the cost of labor. After wages, benefits are the single biggest portion of compensation for employees, so higher benefits costs likely mean lower wages for fewer employees.
If you had the chance to make one change to this law, what would it be and why?
I would take the employer penalties out of the mix. Heretofore, we’ve had a voluntary health care system. We have encouraged firms who can provide coverage to do so, but the shift to a mandatory system ultimately is going to be hazardous to retail jobs and to our customer’s pocketbooks. I would take that mandate off, and focus more on the cost of medical care and its coverage.