For the estimated 1.2 million trucking companies in the U.S., it’s no secret that the industry has long faced serious challenges and risks, including those associated with the health and wellbeing of drivers who, according to the U.S. Department of Labor, experience the most fatalities of all occupations and have more nonfatal injuries than workers in any other industry.
Coupled with those sobering facts, the latest report from the American Transportation Research Institute indicates that trucking companies are experiencing the additional burdens of significant increases in equipment and labor costs, driver shortages, issues with compliance, safety and accountability, and now, impacts of the Affordable Care Act (ACA), which went into effect in 2014 and continues to evolve on into the new year.
Changes to the ACA for 2016 include a revised definition of a “small group employer” from one that has 50 employees or fewer to one with 100 employees or fewer. It’s not compulsory for every state, however, thanks to the Protecting Affordable Coverage for Employees (PACE) Act that was quietly signed into law by President Obama on Oct. 7, 2015. This bipartisan change to the ACA — with overwhelming approval in both GOP-led chambers — gives states the discretion to define small group employer, whether they choose to revert to the original definition or forge ahead with the new one. For the trucking industry, in particular, this is good news if your company is located in one of the many states that have rejected the new definition.
Risks vs. Rewards
If you are a carrier operating in the few states expected to forge ahead with the new definition at least in the short-term, like California, you’ll need to brace for changes and look for the silver lining. Considering that carriers have on average between 51 and 100 full- and part-time employees, the majority will likely be joining the small group market for the first time and experience a significant increase in the cost of coverage that kicked in on Jan. 1.
In an industry of high risk, ACA changes in small group definition offer a number of new benefits, rights, and protections. In addition to providing tax breaks to small carriers for offering health insurance to their employees, these include the prevention of unjustified rate hikes and discrimination based on an employee’s gender and current or pre-existing health condition.
The new changes also remove lifetime and annual dollar limits, eliminate unfair judgment by focusing on a company’s geographic location rather than its industry, and allow young adults to stay on their parents’ plan until the age of 26.
Finally, the ACA ensures all plans cover essential health benefits (EHB): 10 categories of wellness and preventive health services that provide, for example, coverage for out-of-network emergency room visits and dental and pediatric benefits that are not necessarily included in large group plans.
Knowledge is Power
On the downside, joining the new small group market will undoubtedly reduce plan flexibility yet increase premiums — particularly for companies with older employees — which may provide the impetus for carriers in the 51-100 groups to self-insure as a way to avoid strict requirements.
But self-insuring, which typically involves earmarking money from corporate and employee contributions and setting it aside in a special fund that is used to pay claims as they are incurred, rather than paying fixed premiums to an insurance provider, is a risky proposition.
If more and more companies take this road, it could cause a kind of chain reaction to occur, and premium averages could potentially increase not only among the fully insured 51-100 groups but also for those that fall into the 1-50 range, as these groups will be combined for the purpose of premium rating.
There’s also the full- and part-time employee count to factor in when considering coverage and group size. With the new changes to ACA, an employee is considered full time at 30 hours per week rather than 40.
Also be aware of the full-time equivalent employee hours, which according to SBA.gov are “a combination of employees, each of whom individually is not a full-time employee because they are not employed on average at least 30 hours per week, but who, in combination, are counted as the equivalent of a full-time employee the total amount of part-time hours that are accounted for full time employment.” For example, two part-time employees whose hours in total averaged more than 120 hours per month, would count as one full-time equivalent.
Lastly, be prepared: Companies with more than 50 full-time equivalent employees that fail to offer health coverage to at least 95% of their full-time employees are subject to fines of $2,160 per person after the first 30 employees.
In order to avoid surprises, the best course of action is to stay informed and understand your options. As the ACA continues to unfold and evolve, it’s a good time to examine your employee benefits plans and prepare for the unpredictable years ahead.
Bill Thomas is vice president of Burnham Benefits Insurance Services Inc. a privately held, full-service employee benefits consulting and brokerage firm headquartered in Irvine, Calif. This article was authored under the guidance and editorial standards of HDT's editors to provide useful information to our readers.