Beginning January 1, 2014, the Patient Protection and Affordable Care Act (health care reform) will impose new obligations on individuals and employers throughout the United States. For the first time, larger employers will be subject to "pay-or-play" penalties if they do not provide health coverage for full-time employees. Every employer, including those in the mortgage banking industry, should be thinking right now about the costs and opportunities health care reform presents. Actions taken by employers in 2013 can affect whether they will pay an Affordable Care Act penalty in 2014. Employers can avoid or minimize penalties by changing their workforces this year.

Ballard Spahr's Health Care Reform Dashboard, launched in January 2013, is the only website of its kind where employers can access information and guidance about how the Affordable Care Act will affect employers.

Every employer should be taking steps in 2013 to determine how it will be affected by the Affordable Care Act. Consider the following—if a company employs 500 full-time employees, but fails to provide health benefits to just 26 of those employees, the employer will face an annual penalty of nearly $1 million.

Specifically, every employer should:

  • Determine whether it is a "large" employer subject to the pay-or-play penalties
  • Determine which affiliated entities need to be combined with the employer for penalty purposes
  • Analyze whether specific classes of employees (e.g., seasonal, temporary, part-time, variable hour employees) could generate a penalty for the employer
  • If the employer retains employees through a temporary/leasing agency, analyze whether those employees could subject the organization to a penalty
  • If the workforce consists of independent contractors, assess the risk that those individuals may be counted as employees for penalty purposes
  • Identify employment law implications of converting full-time employees to part-time employees
  • Determine whether the employer's health plan coverage is both adequate and affordable to avoid penalties
  • Conduct a cost-benefit analysis as to whether the employer should continue to provide a health plan going forward, and if so, consider what alternative arrangements might be practical
  • Amend its health plan documents to reflect the new limit on health flexible spending account contributions and other required changes to cafeteria plans
  • Amend health plan and cafeteria plan documents to reflect required Affordable Care Act changes
  • Review the design of wellness programs to ensure compliance with the health care reform rules and other applicable law
  • Understand all other aspects of health care reform as it may apply to the employer