Ok, I admit it.  When I heard about the Patient Protection and Affordable Care Act being signed into law and saw that many of the effective dates were far off in the future, I did not do a lot of detailed reading.  Sure I read the summary table in the newspaper, and I thought about sitting in on the dozens of webinars that were offered to me, but for a few months I had more important things to do.  Anyway, the 2600 plus pages of the Act were certain to be explained, clarified and modified by thousands more pages of regulations and interpretations over the next few years, so why don’t I just wait for those?

Well, I finally got around to attending an excellent seminar on the topic, and it succeeded in shaking me out of my denial phase.  I started to focus on the question: “What can small and medium size businesses actually be doing to prepare for the impacts of this Act?”

Here are a few thoughts:

1)  Get help!   You cannot and will not be able to decipher all of the impacts of the law and the subsequent regulations on your own.  With the many different effective dates for the various provisions of the law, there will be a steady stream of content crossing your desk.  Some of it will apply to you and some will not. Some of it you can plan around and some of it will be imposed upon you.   This is an excellent time to make sure that you are being supported by human resource and employee benefits professionals.  Most firms will not have the expertise in house, so they will need to look to either their insurance broker/agent or employment attorney, or in some cases their tax accountant.

Since your attorney and accountant will charge by the hour, you will want to make sure that you are getting as much help as possible from your insurance broker/agent.  If your long time insurance agent also happens to be an old college friend or golf buddy, that is not necessarily a problem.  If that is the only reason they are your insurance agent that most likely is a problem.  Call them today and ask for an update on what you should be doing in light of this new legislation.  See how knowledgeable they are.

2)  Don’t make any major benefit changes without considering the long term implications!  It makes no sense to add a benefit or change eligibility rules without considering the potential long term implications.  You run the risk of adding a feature that you find you can no longer afford or cannot legally offer in the future.   For example, in 2013 the Flexible Spending Account limit will be $2,500.  It would be foolish to increase your limit to $4,000 in 2011, only to have to backtrack in two years.

3) Think systems!  If you are using an in-house payroll system or a package that does not provide regular updates, now is the time to look into other options.  There will be numerous changes that impact tax withholding and reporting.  Unless you have a payroll system that is tightly integrated with your other financial management systems, strongly consider outsourcing the payroll systems function.  There are a number of highly qualified payroll processing companies, (national, regional and local) that will keep track of all of the changes for you.  Most of them can also provide service in other employee related areas:  unemployment claims, COBRA, retirement plans, etc.  This is their business, so chances are they will do it better than you do!

This is also a good time to check into your compliance with 1099 information reporting requirements.  Many companies mistakenly think that these reporting requirements do not apply to them.  Buried in the Act is a provision requiring organizations to issue 1099’s to all providers of goods and services in excess of $600 annually, effective in 2012.  IRS audits of compliance are certain to increase.  Make sure that your accounts payable system gets regular updates so that you will get new versions of 1099 forms as they are modified.

Get started treating your health care headache today!

Helpful Link:  http://www.kff.org/healthreform/8060.cfm