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In-house Access Insight & Commentary for In-House Counsel Worldwide

Health Reform: What Is a Retailer to Do?

Posted in In-House Practice

Guest Blogger: With 15 years’ experience in the private sector practicing corporate law, leading cross-functional teams and counseling on risk management, Ryan Blum assists and advises Lockton St. Louis/Memphis on business development, and manages operations and client services on a day-to-day basis. He received his J.D. and MBA from Saint Louis University, and his B.S. in International Business from Northwest Missouri State.

While many are playing the “wait and see” game, hopefully proactive companies like yours, and your Financial and HR leaders, are getting out in front. According to ACC’s Chief Legal Officer 2013 Survey, 50 percent of respondents said health care reform was a top challenge to be addressed over the next 12 months.

Retail is an industry segment most at risk — since the choice of extending robust health coverage to hourly employees versus incurring a large non-tax-deductible penalty is like a modern day Scylla and Charybdis. Don’t blink now, however, as there are many alternative options your company may seek.

At the heart of it all is the health reform law requirement that employers with at least 50 full-time equivalent employees must offer health insurance to their full-time workers and their families, or pay a penalty to the Feds. Currently, the law in 2014 defines a full-time employee as one averaging at least 30 hours per week.

Whether or not you have a seat at the table in terms of implementing your company’s benefits strategy, by now, it’s clear to you that there’s a built-in incentive to keep workers to 29 hours or less. The word on the street is that many are already doing so. This strategy, however, is the easy one. What is more challenging is to identify other options that will minimize your company’s penalty exposure and overall cost of benefits, while allowing employees a reasonable choice (either sponsored by the company or the “yet to be determined” insurance exchanges).

Thoughtfully designing your benefits plan (or plans) such that they are legally compliant but also budget-sound for the long haul is key. This, in turn, gives your management an opportunity to align its health care offerings with corporate strategy and objectives, such as retention goals. At Lockton, for example, we have the experience, specialized modeling tools and know-how you need to provide the right guidance given your particular set of circumstances and demographics. Aside from the ratio of full-time to part-time workers, recommendations vary based on a number of factors, including but not limited to:

  • number of employees,
  • turnover rate,
  • average employee age and wage,
  • health of your risk pool, and
  • company culture.

The federal agencies implementing PPACA (IRS, HHS, etc.) continue to issue guidance and rules on implementation, so we must not take our eyes off the ball. This is especially true for retail-based companies that need to be preparing now rather than later.