HOT SPRINGS, Va. (July 9, 2014) — One bad bill can affect everyone.
Upfront it may sound a bit melodramatic, but it's not far off from reality, according to Steve Akridge, executive director of the Virginia Automotive Association (VAA).
“From an association point of view, we're obviously involved in the legislature,...” Mr. Akridge told Tire Business during the VAA's annual 2014 “Connecting Virginia's Automotive Professionals” convention and trade show, held in April at the historic Homestead Resort in Hot Springs.
“It's a big deal at every level, nationally and state.
“We have over 3,000 bills go through our general assembly and they're in and out in two months, and if you're not there to watch what's going on, a bill could slide right on through and you'd never even know it,” he continued. “So it's pretty important we're there to represent the tire and automotive industry.”
The agenda for VAA's annual meeting was geared heavily toward legislative issues, which Mr. Akridge said are especially important to the VAA and its members. And judging by the tone of the event, perhaps none is more important than the Affordable Care Act (ACA).
Roy Littlefield, executive vice president of the Tire Industry Association and a keynote speaker at the event, told a room full of dealers that the ACA may be the biggest issue facing the industry right now.
“It's like a lot of the legislators just think that you have a closet in the back room that's filled with money that you can pay for all these things,” he said. “It's really amazing how a lot of elected officials view businesses.”
During the event, guest speaker Charlie Crowder, vice president of Managed Benefits Inc., an employee benefit brokerage and consulting firm from Glen Allen, Va., discussed some practical strategies for complying with the ACA.
“What we have now is complete chaos,” he said. “This is not an interesting time anymore. Obamacare is driving all of us crazy and all of our clients crazy because the nature of the beast is so complicated.”
For one thing, the traditional structure of set coverage rates — individual, spouse, child, family — has been done away with, and now every age has its own rate of coverage, Mr. Crowder told dealers.
“A family is no longer just a unit,” Mr. Crowder said. “A family is individual, 51; spouse, 47; dependent, 24; dependent, 18. You add all those individual rates up and that's family now. There is no one model that fits all anymore.”
The age differentiation complicates employee contributions, Mr. Crowder said, because it's more difficult to contribute fairly when employees have different coverage rates. He suggested that employers stick with either a flat dollar amount or a flat percentage, but added that both options come with caveats.
Using the flat dollar amount, older and more senior staff members likely will end up paying the most for coverage.
Paying a flat percentage rate means that older employees will still be paying more, but not to as large an extent. However, this practice may be considered discriminatory.
“The problem is you're now contributing a different amount of money for employees,” he said. The Internal Revenue Service (IRS) has delayed the ACA's non-discrimination testing until 2015.
One cost-cutting option he suggested — which has been “by far the least popular” — is to exclude spousal coverage. This option reduces enrollment volume and allows spouses to get a subsidy if they qualify for the exchange, but it sends a negative message about family values and can complicate medical coverage for families.
Another strategy, which he said can be especially effective for businesses with less than 50 employees, is to drop or sharply reduce who is covered and allow individuals to seek other options. According to Mr. Crowder, some employees actually are better off getting a plan on their own.
In some cases, businesses do a disservice to employees by offering them health coverage “because you have to give them affordable care...but they can go to the federal government and get a subsidy.”
For lower income workers, even though they have to pay for a health premium with after tax dollars, subsidies can make it a more affordable option.
Other strategies Mr. Crowder suggested included creative plan design using Medical Expense Reimbursement Plans, Health Reimbursement Accounts, Health Savings accounts and Flexible Spending Accounts.
In addition, he said more emphasis on partial self-funded plans for small businesses will be coming in 2015. For dealers who believe they have a healthier-than-average workforce and are willing to accept some risk, this may be a good option.
According to Mr. Crowder, some benefits of a small group partial self-funded plan include very low risk corridors when combined with stop-loss insurance; no-loss carry forward; level premiums and a reduction in premium tax; and access to claims data.
Finally, Mr. Crowder said if a small business decides to go back to being fully insured, it can do so without being penalized because there is no underwriting for smaller groups.
Also during the meeting, Bill Ford, president of Bristol, Tenn.-based Sesco Management Consultants, discussed other employee-related legal issues, including immigration.
“It's a hot topic politically. Nobody knows what to do. Both sides are trying to figure out what to do, but guess who's stuck in the middle?” he asked.
According to Mr. Ford, legal and illegal immigrants account for about 24 percent of workers in automotive service in the U.S., and with violations ranging anywhere from $375 to $16,000 for multiple offenses, it's imperative that dealers fill out and submit I-9 forms.
Mr. Ford also touched on wage violations, which he said accounted for the most financial violations affecting employers in 2013.
“It overtook EEOC (Equal Employment Opportunity Compliance) harassment, OSHA (Occupational Safety and Health Administration) and other types of employment law violations,” he said. “Wage-an-hour is still a real issue for us.”
Mr. Ford urged dealers to be careful about employees working before and after shifts, pay attention to clock-in times and make sure to include non-discretionary bonuses when calculating overtime. He also said to be wary of how managers are spending their time in order to avoid issues with misclassification of their workforce.
“Of course managers are going to do a little bit of everything,” he said. “They're just like owners — we all get our hands dirty. But make sure managers are not spending too much time turning wrenches or otherwise.”