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Tuesday July 29th 2014

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Putting the Affordable Care Act to Work

Small businesses weigh-in on health insurance
By Jennie McKeon

Some may have been waiting to see the outcome of the 2012 Presidential Election before they started to worry about healthcare reform. Now, the New Year is here and with it comes over 2,000 pages of the Affordable Care Act.

Small business owners are now scrambling to find out how to comply with the law. They are crunching the numbers to see if it’s cheaper to pay the mandate or provide health insurance to their employees. That may be the wrong approach.

“So many people are focused on the employer mandate,” said Ted Kirchharr, vice president and chief operating officer of Landrum Professional. “It really misses the point.”

Kirchharr believes that employers shouldn’t be looking at dollar signs, but why it’s worth it to provide talented employees with health insurance.

“That’s an issue that’s been out there before the reform,” he said. “Employers should be thinking about how important employee benefits are. Do they want to provide healthcare because they need to do it to retain good employees or because they think it’s the right thing to do? What role do benefits play in your talent strategy?”

Ahead of the game

Not all small businesses waited for the federal government to weigh in on health insurance at the workplace. Denise Berry decided years ago to provide health insurance to her full-time employees at her small, video advertising firm, Reel Centric.

“We made the decision early on to offer health insurance to our full-time employees and dental insurance to all employees,” Berry said. “We currently employ four full-time employees and have offered a group plan through Florida Blue since 2008.”

Through the Affordable Care Act, only businesses that employ 50 or more full-time or full-time equivalent employees are required by law to offer coverage. But employers with less than 25 full-time equivalent and whose average wage is $50,000 are eligible for tax credits.

“With the ACA, we now qualify for a 50 percent tax credit because we have elected to offer coverage without being required to do so,” Berry said. “This is what I consider smart policy as it benefits both the employee and employer.”

Berry hasn’t just benefited from tax credits, but with the overhaul of the healthcare system, she’s saving money.

“ACA has resulted in cost savings for my business in three main areas:  insurance rebates, tax credits and lower premiums,” she explained.  “For the first time in five years, Florida Blue dropped our group’s insurance premium. Competition is good for the marketplace, so is accountability—the ACA brings both—and it’s already working in tangible ways.”

Last year Berry received a rebate check from her insurance for $581.40. She had the choice to apply the rebate to this year’s premium or distribute it to employees. According to the Affordable Care Act, insurers must spend 85 percent of the premiums on medical services.

“I think this requirement brings new accountability to the health insurance marketplace,” Berry said.  “It is an incentive for insurers to focus spending on actual health care—improving the customer experience.  This approach is revolutionary for an industry long unaccountable, with no reason to be competitive or customer-centric.

Berry is also co-owner and operator of The Leisure Club. She estimates that half of her part-time employees are either eligible for health insurance through the Medicaid expansion or under their parents or spouses plan.

“For these uninsured employees, I’m looking forward to the ACA’s Affordable Insurance Exchanges being created in Florida so that they will have access to an affordable plan of their choosing,” she said.

For Berry, the act of providing health insurance isn’t a mandate or a business strategy. It’s a right.

“Health insurance is a quality of life issue to me,” she said. “A person’s health and their ability to have control of their health care affects their livelihood on every level. As an employer, I think I should share some part of that responsibility, to the degree to which I am able, since my employees have chosen to build their livelihood with me at my business.”

Getting in the know

Kirchharr and Landrum Professional, a professional employer organization, hope to give small business owners who may not have been following the health care reform as closely as Berry, the knowledge and facts they need to make important decisions in 2013.

“2013 is a critical year,” Kirchharr said. “Many provisions take effect in 2014 and there are still regulations that haven’t been written yet. All through 2013 it’s important that employers try to stay current on changes out there.”

To help inform business owners, Kirchharr has written, “The Busy Business Owner’s Guide to Health Care Reform: What You Need to Know.”

“There’s so much confusion and it’s a very serious issue,” he said. “I saw there wasn’t anything geared for employers.”

Kirchharr also conducted a free seminar through the University of West Florida’s Small Business Development Center. The January 9 mid-day meeting covered the basics on what’s in effect now and what employers should be preparing for in 2014.

About 20 people showed up and the businesses they represented varied—owners of restaurants, home health care and more.

“This is not a debate,” Kirchharr warned about the meeting. “This is simply the facts.”

Kirchharr set out to inform employers because he believed that there were enough who were not prepared for the provisions ahead.

“One issue that’s facing us in March 2013 is that all employers need to distribute a notice to employees about the healthcare exchanges although the rules haven’t been written yet,” he said. “I venture to say that nine percent of employers don’t know they have to do that.”

Sure enough, at the January 9 meeting, he asked the room to raise their hands if they knew about the notice. Not one hand was extended.

Quite possibly one of the most confusing facets to the healthcare reform laws, is how many employees make a business eligible for the mandate. It’s not just a matter of how many employees you have. The requirement is 50 full-time employees, which means many small businesses don’t have to worry.

“People got excited about this provision when they didn’t need to be,” Kirchharr said. “I had people that called me and said ‘I have three employees, I can’t afford health insurance.’”

In an effort to find a loophole, one man raised his hand and asked if he could split his employees into two separate entities to avoid the mandate.

“Nice try,” Kirchharr said. “We’ve heard all sorts of creative things.”

Seeking Coverage

Jenny Wolff, registered nurse and administrator at Home Care Solutions, went to the SBDC meeting to find out how she could provide insurance for her employees. They’ve always wanted to provide employees with insurance, but were never able to afford it.

“It isn’t a real high-paying field,” Wolff said. “We would like to be able to at least offer them insurance.”

“Everybody deserves insurance so that if you need it, you go it,” she added.

Right now, Wolff said they are in the process of pricing group insurance plans. Wolff currently has insurance, but is looking forward to more affordable coverage through the reform.

“I have to pay a big fee,” she said referring to her health problems. “Now they won’t be able to charge me for pre-existing conditions.”

Wolff said she thought the SBDC meeting was very helpful and is excited about the Affordable Care Act.

“I think it’s a good thing,” she said. “I can’t wait until 2014.”

Berry stresses preparation as being vital in dealing with ACA.

“I would say, know the facts,” Berry said. “This month, I would call a local insurance agent and start shopping around for a good plan.  Your local agent will also be able to provide advice on the ACA implementation, and your accountant can advise on the tax credits you will earn.”

As business owners look to 2014, there will be a lot to consider, but with employers like Berry and Wolff, more people will be able to live happy, healthy lives.

“Facing illness is challenging enough without the fear of financial ruin in obtaining care,” Berry said. “It is also heart-breaking to see an uninsured friend receive a devastating diagnosis too late because they did not have access to regular health care check-ups and avoided a hospital visit when initial symptoms occurred because they feared the cost.”

“From a business perspective, offering a solid benefits package is a huge recruiting and retention tool, an investment in a healthier staff and will build a better economy overall.”

FOR MORE INFORMATION
Reading material to get you in the know.

“The Busy Business Owner’s Guide to Health Care Reform: What You Need to Know,” by Ted Kirchharr. Available in Kindle version on Amazon.com

Healthcare.gov—Provides information about healthcare for all situations.

Landrumhrblog.com—Landrum will be providing up to date coverage on provisions and regulations as they come up.

BASIC ACA FACTS

*Employers with less than 25 employees with an average salary of less than $50,000 who already provide health insurance are eligible for a tax credit. This has been in effect since 2010 and will be in effect through 2014.

*Through the ACA there are no lifetime limits, which is a cap on the total lifetime benefits you receive from insurance. There is no ability for rescissions unless it’s because of fraud.

*There is an extension of dependent coverage. Dependents can stay on your plan until the age of 26. Kirchharr pointed out it’s actually 30 for most policies in Florida.

*Right now there are no exclusions for persons under the age of 19 with pre-existing conditions. In 2014, there will be no exclusions for anybody.

*Employers who have less than 100 employees who work 25 hours or more per week and have no wellness plan in place may be eligible for grants to establish a wellness program for employees.

*Insurers are required to provide a benefit summary that meets uniform standards to make it easier for consumers to compare coverage and benefits.

*Any employer covered by ACA must notify employees that an exchange exists and of the subsidies that they may be eligible to receive.

*The employer mandate requires employers who have an average of 50 full-time or full-time equivalent employees during the preceding calendar year to provide adequate coverage to those employees who average more than 30 hours per week. If the employer fails to do this, they will be subject to a penalty, which is $2,000 per year per employee.