Health care reform is likely having a major impact on many hoteliers. The rolling requirements mean that the clock started to tick when the Patient Protection and Affordable Care Act (PPACA) was signed into law on March 23rd, 2010—and it won’t stop ticking until 2018.
As employers of a largely part-time, temporary or seasonal workforce, the hospitality industry will likely be significantly affected by the legal obligations of providing health care coverage to employees—a change that is likely to translate into a dramatic increase in benefit eligibility and thus, marginal enrollment. How hotels respond to these new requirements will test their ability to meet compliance standards, manage their workforce, maintain customer service, control cost and continue to seek profits.
The immediate concern, making headlines, is how the PPACA defines employee status based on: employee income, employee age, employee full-time or part-time status and total number of employees. PPACA, for the first time, defines a "full-time" employee for benefit purposes, which is substantially different than current practice and imposes maximum waiting period provisions for new hires. Another provision of the new bill requires that eligible dependents 26 years of age and under be provided coverage under their parent’s health plan. While waivers are available for limited health benefits or “mini med” plans until 2014, these mandates, and others, may require the hospitality industry to completely rethink their workforce composition.
With an ear to the ground, I can tell you that the approaching provisional rollout is on the radar of hotel business leaders. As my colleague—Rick Wald, Director, Deloitte Consulting LLP—has stated, when it comes to the implications of health care reform, many hospitality companies are aware, concerned, and have not started to actively address the issue. Employers are aware of the immediate changes they will have to make this calendar year, and may have a sense of what projected costs will look like the next calendar year but are probably anxious of the administrative complexity imposed by extensive benefit reporting mandates. Though the law does not require employers to provide the coverage, it does impose new tax penalties if they don’t.
The optimists among us may also see an opportunity to step back and consider a fresh look at organizational, talent acquisition and retention strategies. Workforce planning and optimization can be hard work, but they may be more desirable than an expanded benefits-eligible workforce.
The hospitality industry should be prepared to understand and anticipate potential PPACA impacts. With four years and more than 800 pages of health care reform provisions looming, it’s come time for businesses to initiate the discussion.