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No Benefits Administrator? No Problem
As health care reform deadlines approach, it’s time to start thinking about how your hotel company will react – or hire someone to help.
Monday, April 18, 2011
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Ever hear the phrase "Mad as a Hatter”? In 19th century England, a "hatter" was a professional who made and fixed hats, and hatters used a glue which over time caused them to act crazy (mad). Therefore, a person who acts as if they are crazy (mad) is "mad as a hatter." A person who is spread too thin across too many situations or job classifications is said to be "wearing too many hats." Therefore, one might conclude that someone who wears too many hats could theoretically become mad as a hatter.
In today's hotel environment, especially given the recent economy and countless layoffs required to stabilize bottom-line bleeding, hoteliers -- especially the smaller lodging operators -- are being forced to wear many hats, from Owner/Operator to Day/Night Manager, Auditor/Accountant, Trainer, Housekeeper, Maintenance provider, Marketer, Revenue Manager, Brand Champion and most recently, thanks to the new Patient Protection and Affordable Care Act (PPACA, Health and Benefits Administrator. Determining which hat to wear, when, can be a daunting task. Throw in the need to learn and understand the complicated new rules and regulations of health care reform and it's no wonder that countless small hotel operators are feeling a bit "mad."
To make matters worse, owners who do not have a thorough understanding as to how the new health laws will impact their business may soon be facing violations. There is no time like the present to either get educated and legitimately wear the hat of a Health and Benefits Administrator, hire a qualified Health and Benefits Administrator, or seek out the consultative services of a professional hospitality organization that can do the job for you -- simply and affordably.
Insure or Not Insure?
In some cases, it may be in the owners' best interest not to offer employee health insurance at all and instead pay the proposed annual penalty fee of $2,000 or $3,000 per employee depending on the employees' eligibility for a government subsidy. Companies with more than 50 employees will be penalized for not offering insurance. Employees who work 30 or more hours a week on average over the course of a month must be offered benefits. The new law will not affect employers with less than 50 employers who do not offer benefits. Instead, employees may be able to purchase health insurance from state-based exchanges.
When preparing to comply with regulations, there are a lot of factors that need to be taken into consideration, such as size of the hotel company, the location of the business, where employees reside, and even the demographics of the workforce. In a multi-property environment, owners also need to determine if one plan is feasible for all properties or if different plans are required by each state; and, are union-based plans essential or will employer-based programs suffice. Once that is determined, owners/operators need to know what each program will look like, what it will cost to get from here to there, and what steps need to be taken to achieve the end goal.
Many of the smaller hotels can provide affordable coverage to key employees and their families, but it stops there. Extending that coverage to line-level employees is far more costly -- and that represents a large uninsured population. Larger hotels, on the other hand, are finding it even more difficult to insure top-level staff due to big-group stipends.
The new health care law will not allow most employers to provide top-level employees a different benefit or cost share than line employees in most situations without large penalties for discrimination. Every business must focus on all the costs of providing insurance and weigh that with both the penalties and costs associated with not providing an employee benefit plan. It may cost the employer more to offer the insurance, but if it produces less turn-over, it might be better in the long run to offer coverage.
Grandfathering Your Plan
If the above considerations don't have you feeling a bit "mad" just yet, here are a few more key items that need to be addressed immediately:
1. Grandfathering Your Plan – There are several advantages in keeping your plan grandfathered. The most advantageous is not needing to comply with the Discrimination Testing provisions. While this clause has been placed on hold while in a comment period, it has been a confusing topic for many months, and that confusion will likely continue as it is implemented. Another advantage is not requiring an outside claims appeal process, which will help save on plan costs. Remember that some plan changes are allowed; however, there are formula’s that must be adhered to that are complicated to follow. If you’re not sure whether staying grandfathered is best for your plan, talk to your employee benefit advisor.
2. Dependent Children to Age 26 – Know the Federal laws and your State laws. For the Federal law, you’ll need to know whether your plan is grandfathered or not. Grandfathered plans can stipulate that if the child is eligible for other group coverage, either through their employment or their spouses, they are not eligible for your plan. If your plan is not grandfathered, it does not matter whether they are eligible for other coverage, they must be allowed on your plan. The IRS changed the pre-tax regulations to reflect the new age limitation, but your state may not have updated this part in its tax codes.
3. Model Notices – There are several new model notices that must given to each employee. You can obtain these by visiting www.healthcare.gov. The notices include the Extension of Dependent Coverage, Lifetime Limit No Longer Applies, Designation of Primary Care Providers and Direct Access to OB/GYNs.
4. Pre-Existing Condition Insurance Plan – Do you have a part-time employee that is not eligible for your plan, but also cannot obtain private insurance due to medical conditions? If so, point them to the Pre-Existing Condition Insurance Plan (PCIP) at www.healthcare.gov. They may be eligible to join either through your State or the National plan, with no pre-existing condition waiting clause. There are “anti-dumping” rules in the law and the Department of Health and Human Services (HHS) is investigating several instances of employers “dumping” employees into the PCIP.
5. Essential Coverage – Various governmental departments are meeting to develop the regulations on what must be covered in every plan. While PPACA listed the broad coverage categories, such as prescriptions, maternity, doctors office visits, inpatient hospitalizations, etc., HHS and others are tasked with developing the coverage items in each broad category. While there is no release date or implementation date published yet, they are anticipated soon.
6. Remember to Document Your Plan – Documentation of the plan staying the same and/or documentation of changes, will be essential in the days ahead. Make sure you keep copies of plan summaries, certificates of coverage, summary plan descriptions and any other items relevant to your health plans as of March 23, 2010. Documentation is essential if your plan is grandfathered.
With regulations coming from HHS, the IRS, the Department of Labor (DOL) and others, there will be more confusion and frustration as everyone works through these processes. There are many resources available to help you keep your employee benefit plans in compliance with PPACA. If you are among the owners/operators who don't have the good fortune of employing a Benefits Administrator, there are still affordable options for you to secure help.
So, if "Health and Benefits Administrator" is a hat that you are not comfortable wearing, don't. Complimentary "audits" from hospitality-specific Insurance Services groups are now being offered to help steady hoteliers nerves and determine "if" and "which type" of a health benefits plan is right for their employees.
About Steven J. Belmonte
Steven J. Belmonte is CEO of Hospitality Solutions, LLC, a Windermere, Florida-based company that provides Franchise Negotiations (new franchise agreement negotiations, franchise termination/liquidated damage claim negotiations) and Legal Services (mediation, expert witness and litigation support) to the lodging industry. He also serves as head of Hospitality Solutions Insurance Services LLC, Altamonte Springs, Fla., a company that provides custom discount insurance services, including: property insurance, general liability, Workers' Compensation coverage, group health benefits, commercial automobile liability (including shuttle buses), liquor liability, employee benefits, wake-up call liability, excess liability and more; Hospitality Solutions Real Estate LLC, Parsippany, N.J., operating as a licensed discount commercial real estate and lending broker; and Hospitality Solutions Payroll Services LLC, Altamonte Springs, Fla., providing payroll, tax and human resources services. Previously Belmonte served as former President and CEO of Ramada Hotels and as Chairman of the American Hotel & Lodging Assn.’s Foundation. For more information, call (407) 654-4600, email steve@belmontehs.com or visit www.stevenbelmonte.com.
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