While more than 90 percent of the Valley’s businesses are not mandated to provide health insurance under the Patient Protection and Affordable Care Act (PPACA), better known as ObamaCare, they are not free from requirements. On October 1st, all employers must notify their employees about the existence of the Health Insurance Marketplace.
This little known part of the 2,409-page law has not escaped notice by local broker, Dan Ward, vice president of sales of Ahart Benefit Insurance Services. He advises small businesses to review the model exchange notice requirement by contacting their brokers/insurance agents.
The U.S. Department of Labor also has downloadable templates for employers to use to make it easier to meet the notification requirement. There are templates for employers who offer insurance and those who do not offer insurance. The notifications must be delivered in writing. For information and to access the downloadable forms, visit dol.gov/ebsa/healthreform.
Although there is no fine for not complying with the notification requirement, companies who do not meet it will be out of compliance.
On October 1st, Covered California, the state’s Affordable Care Act marketplace, will also be accessible for all businesses with 50 employees or less. The rates, which vary by region, are said to be comparable to those previously only available to large companies. The Obama Administration contends that many firms that do not currently offer coverage will be more likely to do so because of lower premiums and wider choices in the exchanges.
Companies that do offer insurance are also eligible for a substantial tax credit. Businesses with fewer than 25 full-time employees making less than $50,000 a year may qualify for a small business health care tax credit. Starting in 2014, the tax credit is worth up to 50% of the contribution toward employee premium costs (up to 35% for tax-exempt employers). This will make the cost of providing health coverage lower.
The credits are also advance-able, so businesses can pay lower health insurance premiums each month rather than wait for a whopping reimbursement check come tax time. It is also refundable, so even people with moderate incomes can get the full benefit of the credit.
To see if you qualify for the credit, visit IRS.gov that has an online calculator and additional information about qualifying for the credits. If you currently get the credit, it is important to make sure your insurance is through the insurance exchange or a qualified broker to continue to receive the tax credit after 2014. Also, if you qualify for the credit, don’t forget to claim it. The Government Accountability Office reported that many businesses don’t claim the credit even though they are qualified.
Glenn Morris, president/CEO of the Visalia Chamber of Commerce, echoed other local chamber executives around the Valley, “At this point, our advice is to get as much information and education as possible prior to making any final decisions.
“We recommend that business owners take the time to meet with their brokers/agents and to do as much independent research as they can so that they know what their options are relative to the new law.”
Sandy Blankenship, director of Exeter Chamber of Commerce, said most of the businesses in Exeter are very small and don’t offer insurance. Very few businesses have even called to ask about the Affordable Care Act. “To be honest with you, I don’t know enough about it because it keeps changing,” she said. So she refers them to a local broker who has kept up to date on all the changes and known for his integrity.
“We don’t expect a lot of companies to run out and sign up,” Blankenship said.
Lindsay Wellness Center Director Marie Arroyo also said businesses in Lindsay weren’t waiting with baited breath for the marketplace to open. “I don’t think there’s any employer here right now that’s planning on signing up,” Arroyo said.
According to a recent poll by the U.S. Chamber of Commerce, 82% of small business owners didn’t know what the Health Insurance Exchange was. The poll also showed that 56% of exempt small business owners still believe they are required to provide insurance.
In 2015, large companies that don’t offer insurance face penalties of up to $2,000 per employee. This mandate applies only to businesses with 50 or more people who work upwards of 30 hours a week. That makes 96% of employers exempt. Yet a majority of business owners with fewer than 50 workers believe the mandate applies to them, according to a recent survey of 259 companies by online insurance marketplace EHealth.
Peter Lee, executive director of Covered California, said the reason businesses don’t offer health plans is not because there weren’t penalties. “Surprise! It’s because up until now it’s been unaffordable,” he said at a town hall. The Health Insurance Exchange will address that barrier, he said, by giving businesses access to multiple, competitively-priced plans and control over how much they pay for premiums.
On October 1st through March 31, 2014, small businesses can check out the plans offered and their potential savings by visiting CoveredCA.com in the SHOP, (Small Business Health Plan Options Program) area. Business will need to provide their Employer Identification Number, Tax ID and number of employees (and their employees’ dependents if they choose to cover them). Call 1-800-706-7893, Monday through Friday from 9 a.m. to 5 p.m., with any questions on Covered California’s SHOP program.
“The majority of our small business owners are very concerned about increasing their costs to provide new benefits,” said Morris. “I don’t think that anyone has a quarrel with the objectives of the initiative – ensuring that families have access to affordable care. The concern is with the methodology chosen which puts the burden of that effort on employers and, in particular, small businesses. Given the fact that we’re just starting to come out of the most difficult economic period in a generation makes it even more difficult to increase the cost of operations right now.”
Starting in 2014, all plans will offer the same basic coverage that fall under the “Essential Health Benefits” as defined by Obamacare. These services include doctor visits, hospitalization, emergency care, maternity and newborn care, pediatrics, prescriptions, medical tests, mental health care and others. Plans must also cover preventive care services like mammograms and colonoscopies with no out-of-pocket cost to consumers. Ward said because the plans are the same, many employers who already offer insurance will not switch to the ObamaCare Health Insurance Exchange.
“We don’t see a large migration for small businesses to the exchange,” said Ward.
“The only advantage for small employers with 25 or less employees are tax credits. But small employers must meet certain qualifications,” he said. “Brokers should be able to answer employer questions and provide quotes for inside the shop exchange and outside the exchange.”
To qualify for the tax credit, businesses must have less than 25 employees earning below $50,000 annually, and the company must pay at least 50 percent of insurance premiums. Credits are available on a sliding scale. Employers with ten or fewer employees and average wages of less than $25,000 are eligible for the full credit.
“The major concerns that I hear about the Affordable Care Act center around two themes,” said Morris. “One is the potential for increasing the cost of doing business, along with restricting business owners’ flexibility in controlling their costs. The second is the potential impact that the act may have on employment as businesses decide either to not hire more people or to restrict hours (and income) to avoid the costs of the requirements.”
The area’s largest industry, agriculture, may be the most impacted by ObamaCare, Ward added.
“Farmers that have employees that work 30 hours per week will have to offer insurance or pay penalties come 2015. Seasonal workers may be included if the seasonal employee is deemed to work 30 hours per week, meeting the ACA definition,” he said.
Tricia Stever Blattler, executive director of the Tulare County Farm Bureau, said, “Farmers are taking a wait-and-see attitude,” on how they will deal with the Affordable Care Act. “They may be extremely adversely affected by the possible applications of the law. Its hard to make any generalizations.” The bureau held several workshops in the winter to educate farmers on the law.
“The food processing and preparation industries will be the most affected because they have the most full-time employees,” Blattler said.
“Agricultural businesses need to be mindful of the special consideration PPACA provides for seasonal workers, which make up a great deal of the agricultural workforce,” according to California Farm Bureau Federation (CFBF). The CFBF is the state’s largest farm organization, comprised of 53 county farm bureaus currently representing more than 74,000 agricultural, associate and collegiate members in 56 counties.
The employer mandate, which requires a business with over 50 full-time employees to provide insurance, exempts seasonal workers. However, the definition of seasonal workers has caused some confusion. “A seasonal employee is one who works for less than 120 days. Anyone who works less is not counted among the 50 you must employ to be a large employer required to offer coverage,” said Bryan Little, CFBF, labor relations.
According to the CFBF, the IRS has stated that an employer can use its own reasonable definition of ‘seasonal’ and determine an employee’s full-time status by looking at a 12-month measurement period. “Examining employment over a 12-month period leads to the conclusion that seasonal workers are not full-time employees that must be provided health care insurance coverage because, although they may work more than 30 hours per week, they are not employed continuously for a 12-month period.”
According to a report issued by the Center for Rural Affairs, one-third of farmers purchase health insurance directly from an insurance company. This is more than three times the national average. If the ObamaCare marketplace is successful in bringing down the cost of insurance, local agricultural businesses stand to benefit significantly from the new marketplaces, the report concluded.