The following comes from the November 2016 issue of Truck Parts & Service. To read a digital version of the magazine, please click the image below.
The way of doing business continues to evolve and change, bringing with it a constant need to stay on top of things.
One such change came with the introduction of United States’ Patient Protection and Affordable Care Act, one of the most expansive pieces of healthcare legislation in American history, which was signed into law on March 23, 2010.
Commonly known as the Affordable Care Act (ACA) or Obamacare, the legislation was developed in an effort to increase the number of Americans covered by health insurance and to reduce overall healthcare costs in the United States.
One key component of the ACA that is especially relevant in the aftermarket is the legislation’s requirement that employers with more than 50 employees must provide minimum essential insurance coverage to all associates and their dependents.
The law has forced businesses throughout the trucking industry to make, or at least consider, wholesale changes to their benefits packages.
Employers with less than 50 full-time equivalent employees can still provide insurance for their employees, but they are not required to do so. If a company with less than 50 employees chooses not to provide insurance, the employees are expected to do so independently, with the employer providing reimbursement.
At Pascale Service Corporation in Rhode Island, Owner Jim Pascale says he’s continued offering coverage for his 23 full-time employees despite the ability to withdraw the coverage under the ACA.
“(The ACA) didn’t really affect us in the fact that we had to offer it, because we already did,” Pascale says. “But certain criteria have changed and that has affected the rates and limits our options as to who we can provide coverage through.”
Pascale’s Human Resources Director Lisa Toye says many smaller insurance providers pop up each year and are quickly gone. She says that creates issues related to what doctors employees can use.
“We want to make sure that our employees have access to the doctors and treatments that they want, so we made a decision to stay away from the newcomers in the marketplace,” she says.
Adding higher deductibles to the employees’ coverage also has been an unfortunate aspect of growing healthcare costs.
“We have tried being creative in finding ways to keep the costs down and for them not to affect the employees,” Toye says.
The Affordable Care Act also offers small businesses with fewer than 25 full-time equivalent employees — with average annual wages below $50,000 — various tax credits to help pay for employee premiums.
And Toye says those credits are tough to get.
“We try and try but have not been able to get the tax credits,” she says.
In cases where a small business decides to offer coverage, the IRS also requires reporting to determine whether employees have been offered affordable, minimum essential coverage, and whether the employer is subject to shared responsibility payments under the Internal Revenue Code.
Requirements are much more detailed for large employers. The IRS says businesses that employed an average of at least 50 full-time employees and full-time equivalents (FTEs) during the preceding calendar year are considered an applicable large employer (ALE), and are required to offer coverage. Additionally, any person or organization that provides minimum essential coverage to an individual must report to the IRS and furnish statements to individuals.
This includes health insurance issuers, plan sponsors of self-insured group health plan coverage and the executive department or agency of a governmental unit that provides coverage under a government-sponsored program.
All ALEs also must file the report, regardless of whether the employer is a tax-exempt or government entity including federal, state, local, and tribal governments, according to the IRS.
For companies such as Four Star Freightliner, which operates six dealerships and employs 180 people, the ACA has forced them to add coverage on items previously not covered through their group insurance.
Dealer Principal Jerry Kocan says his company has always offered good health insurance for his employees and their families, but additional benefits do add extra costs to business owners.
“One of the things a business my size has to do is take care of their employees and their families,” Kocan says. “I am responsible for 180 families and I have always tried to provide coverage that is good for them.”
The ACA has forced them to put benefits into place, however, that employees rarely or never use.
“It forces us to pay for items that our employees don’t need or have never asked for,” he says. “That is the biggest issue for us.”
The Affordable Care Act requires some businesses to cover items that their employees rarely use.Fyda Freightliner, which employees 380 people, has been minimally affected by the ACA, says Controller Patty DePaola.
“Our health plan already covered most things required in the Affordable Care Act,” she says. “About eight years ago we changed our coverage for preventive exams to be covered at 100 percent with no employee copay. We have always stressed preventive exams and want our employees to get them annually. We feel that it is very important that all of our employees have a relationship with a primary care physician and receive all preventive screenings that are age and gender appropriate.”
Kocan says Four Star Freightliner now buys gap insurance that helps cover employees’ deductibles and offers a fl exible spending account that allows employees to put money in to offset out-of-pocket costs.
“The No. 1 complaint that we get relates to the extra out-of-pocket costs,” he says.
“That’s where we have made the most changes in trying to help our employees cut down on those. That’s a real issue and we want to take that pressure off our employees. They are hard-working, good people and I want to help any way that I can.”
Fyda Freightliner President and CEO Tim Fyda agrees.
“Comprehensive and extensive health care coverage for our associates has always been a priority for us. We feel that it is a differentiator in finding and keeping the best employees,” he says.
“We want our people focusing on their job and not how to pay health care bills. Many aspects of ObamaCare will make this a challenge in the future, such as the ‘Cadillac tax’ and incredibly excessive administrative costs. I am very concerned that small businesses can bear this cost burden in the long run.”
But, good health care plans are also an attractive recruiting tool for most businesses.
“We do mandatory open enrollment meetings every year where we review all of our benefit levels and how they compare with industry averages. Our benefits continue to be more extensive and cost our employees less than industry averages,” DePaola says.
“We also spend a lot of time in our meetings going over our wellness programs. We need our employees to make good personal choices to do everything they can to reduce their personal risks and help contain health care costs.”
Kocan partially attributes Four Star’s low-employee turnover to his ability to provide an extensive health care plan.
“We put a high emphasis on good pay and good benefits,” he says.
“I want to keep our employees for life. Taking care of them and their families make them want to work for us, so it is imperative that they know we care about them and will do all we can to take care of them.”
