Q: What are the three most important employee benefits concerns for this year, in your opinion?
A: I think employers are looking at ways to reduce costs, reduce liability and alleviate uncertainty. Despite the Affordable Care Act’s promises of reduced costs, many employers are still facing rising healthcare costs and looking at alternative strategies to try to reduce those costs but still stay within the law. Also, the Department of Labor’s recent focus on fiduciary liability is prompting plan sponsors to reevaluate whether they are meeting their fiduciary responsibilities with respect to their benefit plans. Many are tightening up their processes and documentation to ensure that they are in compliance. Finally, the election and stock market instability have spurred plan sponsors to look at ways to more definitively shore up their plan assets and account for risks.
Q: Which of those three do you think will get clarified this year so that employers can properly follow the regulations?
A: Given the unpredictable political climate, it is not clear what will be clarified this year. Government agencies update guidelines routinely, which may help clarify useful approaches to managing liability and costs.
Q: What are your predictions for small business and the ACA coverage? Are employers hiring more part-time workers rather than full-time workers for openings?
A: Smaller employers who are subject to ACA may try to minimize their ACA exposure by hiring more part time workers rather than full time workers. However, businesses must make sure that such a strategy does not raise ERISA Section 510 concerns. ERISA Section 510 prohibits any discrimination against a participant for exercising a right or interfering with the attainment of a right under ERISA or an employee benefit plan. There is at least one case now making its way through the courts over the issue of whether reducing an employee’s position to part-time status in order to avoid ACA liability may be a violation of ERISA Section 510. We will have to stay tuned to see how that litigation is resolved. Nevertheless, careful employers will proceed with caution and deliberation as a result.
Q: Will small employers continue to offer group coverage, or leave employees to find their own coverage?
A: Given the costs, regulatory headaches, and potential liability associated with being a plan sponsor of group health coverage, it is likely that in the future many small employers (under 50 FTEs) who are not subject to the ACA shared responsibility mandate will tell their employees to turn to the Marketplace as a means to purchase health coverage. Although there are small business tax credits built into ACA in order to try to encourage very small employers to keep their plans, for some the credits will not be enough for them to keep their plans.
THIS IS NOT LEGAL NOR FINANCIAL ADVICE
Melanie Hancock Brown is a shareholder in the firm of Hill Ward Henderson, practicing in the areas of ERISA, employee benefits, and executive compensation. Melanie counsels a diverse clientele of for-profit and nonprofit entities of all sizes regarding their qualified and nonqualified employee benefit plans, including 401(k) and profit sharing plans; defined benefit plans; ESOPs and other stock-based benefits; and health, welfare and other fringe benefit plans. She drafts qualified and nonqualified plans, and provides general guidance regarding plan administration, nondiscrimination, COBRA, HIPAA, and compliance resolution. Contact her: email@example.com.
Jean is a certified senior-level human resources executive/consultant, adjunct professor, management trainer, professional speaker, resume writer, career coach, and published author.