Health

Small businesses: Here’s how to prepare for health care reform

SMBs

This is a guest post by SilkRoad’s co-CEO Flip Filipowski

In the past, small businesses could afford a certain lack of sophistication in their human resources processes.  It was common practice to rely on Excel and labor-intensive reporting, but health care reform is changing the game.

Compliance reporting, benefits administration, and managing employee data are just a few of the back-office tasks that will become more difficult for small businesses to handle manually once further requirements of the Affordable Care Act take effect.  The first open enrollment in the health plan exchanges are expected in October and for penny-wise small business owners, throwing additional manpower at these challenges isn’t the answer.

If you haven’t already, now’s the time to enter the age of HR automation.

The new health care exchange — what’s the goal?

A central feature of the new Affordable Care Act is the government’s new health care exchange. While the finer details are still being worked out, the goal of the exchange is to empower citizens to choose affordable benefits from an array of state-sponsored plans. 

So what does this mean for small business owners?  It means that the onus is on you to ensure that your employees are offered an employer-sponsored plan and offered information on the exchanges as an alternative option.  Having a systematic way of tracking, reporting and communicating this data will be essential to the bottom line.

First, you’ll need to provide a report to Uncle Sam including basic demographic and health coverage data for employees and their dependents.  Tracking these details will be a time-intensive burden, unless you can automate your reporting.  Beyond that, you’ll need to provide proof of enrollment or risk paying $100 per day, per employee for non-compliance.

You’ll also need to make the complete details of health care plans readily available to your employees.  Chances are, you already share the details of your own offerings but, later this year, you will also need to provide employees written notice on the state health insurance exchanges.  Human Resource Management Systems (HRMS) can be set up to provide information on all of an employee’s health care options.

You can also expect each state to have unique reporting requirements to supplement federal mandates.  This might be manageable if you have a single office location, but take notice if your company is spread across the country, or if you have a remote workforce. Your ability to meet the specific criteria will be tricky unless you have technology that can track data and provide customized reports to meet each state’s standards.

Pay vs.play?

For many small businesses, the big question of 2013 is whether it’s more costly to play along with new health care reform mandates or pay the penalty taxes associated with eliminating employer-supported health benefits altogether.  If you have 50 or more employees, one thing is certain – you’re going to have to change the way you do things.

If you’re considering reducing your workforce by moving employees to part-time or contract status, consider this: the IRS will be watching.  Employers will be required to track employees’ hours, and full-time or part-time status, and report to the IRS.  “Variable hour employees” need to be carefully monitored and only those that work less than 30 hours in the designated period may be excluded from eligibility for health benefits.  If you have less than 50 employees, your decision to play could pay off –you may qualify for a 25 to 50 percent small business tax credit, which would help offset the cost of your insurance plan.

Pay or play, accurate reporting will be the lynchpin of your success in avoiding costly penalties, or cashing in on valuable incentives.

HR automation tools aren’t just for the one percent

As the chairman of an HR technology company, I know most small business owners consider automating anything beyond their payroll to be a luxury.  However, in the age of health care reform, that couldn’t be further from the truth.

HR automation is no longer reserved for companies with big budgets and lots of employees.  Cloud-based solutions have alleviated the need for businesses to build expensive HRMS system in-house. Today, you can find a scalable, subscription-based HRMS to suit your needs for as little as $10 per employee, per month. These systems will keep you compliant and ease administrative burdens, freeing up time to allow you to focus on taking care of your most valuable resource — your employees.

Flip_headshot2Flip Filipowski is Executive Chairman and Co-CEO of SilkRoad, a leading global provider of cloud-based social talent management solutions. 

A high-tech entrepreneur and philanthropists for more than three decades, Flip was the Founder and CEO of PLATINUM technology, inc, which he grew into the 8th largest software company in the world at the time of its sale to Computer Associates.

photo credit: Dell’s Official Flickr Page via photopin cc