Wednesday, October 22, 2014

Health care law puzzles some small businesses

By ABBY ECKEL, Herald Staff Writer | 9/13/2013

[Editor’s note: The following is the third in a three-part series examining the local impact of the Patient Protection and Affordable Care Act, or Obamacare.]

With combined health insurance premiums more costly than most house payments, Sandra Kleier said she’s been left wondering, “When will it end?”

[Editor’s note: The following is the third in a three-part series examining the local impact of the Patient Protection and Affordable Care Act, or Obamacare.]

With combined health insurance premiums more costly than most house payments, Sandra Kleier said she’s been left wondering, “When will it end?”

As the owners of a small business, Mexitan Products, Kleier, Rantoul, said she and her husband, Ron, already are feeling the effects of the Patient Protection and Affordable Care Act President Obama signed into law March 23, 2010.

“We have our insurance through our business, which is the only way we can get insurance,” Kleier said. “We have single policies, but the combined total is going to be just right around a $190 increase per month.”

Kleier and her husband’s insurance currently is through Blue Cross and Blue Shield of Kansas, and is costing them a combined $1,500 a month, she said. As a small business, she said, she doesn’t have a firm grasp on the Affordable Care Act, and exactly how it will impact the business.

“We rely on, of course, what our insurance agent tells us,” she said. “So as far as a business, I don’t know if anybody really truly understands everything.”

For all the benefits lawmakers said the Affordable Care Act will bring to individuals and businesses, Kleier said, her small business has yet to reap any rewards.

“I don’t know where the cost of insurance is going to end,” she said. “Even when you try to use your insurance, [the insurance companies] try to find every way they can not to pay a claim.”

PAINS AND GAINS

The Patient Protection and Affordable Care Act, also known as Obamacare, enacted comprehensive health insurance reforms designed to ensure Americans have access to quality, affordable health insurance, according to the U.S. Small Business Administration’s website.

Along with easier, more affordable access to health care for individuals, the new law also has many mandates for businesses of all sizes. Those businesses will be forced into compliance with the law or face a penalty fee, according to the small business website.

The Ottawa Library, 105 S. Hickory St., Ottawa, had a 2-percent budget increase for 2014 because of rising health insurance premiums, Terry Chartier, library director, said.

“We were successful in having our health insurance premium increase reevaluated in 2013, but we expect a substantial increase for 2014,” Chartier said in a previous interview. “The impact it’s having on us is different than other smaller businesses.”

Like Kleier, Chartier said she didn’t fully understand the new law or the full extent of how it will ultimately affect the library’s insurance cost once the new law is put into full effect for businesses in 2015.

“It would be nice if there was more information available,” Chartier said. “I don’t know enough about it to answer questions intelligently.”

HOW WILL IT AFFECT BUSINESSES?

The number of full-time or full-time equivalent workers a business employs will play into how the Affordable Care Act will affect them, Linda Shepphard, director of health care policy for the Kansas Insurance Office,  said.

“For a small employer with fewer than 50 employees, there isn’t a change in terms of compliance,” Shepphard said. “Those small employers aren’t required to offer coverage to employees. If they do offer it, great.”

There is an incentive for employers with fewer than 50 employees that offer health insurance coverage, Shepphard said. Those employers will be eligible for tax credits, she added.

“Since 2010, businesses that have fewer than 25 full-time equivalent employees (FTEs), pay average annual wages below $50,000, and that contribute 50 percent or more toward employees’ self-only health insurance premiums may qualify for a small business tax credit of up to 35 percent to help offset the costs of insurance,” according to the U.S. Small Business Administration’s website. “In 2014, this tax credit goes up to 50 percent and is available to qualified small employers that participate in the Small Business Health Options Program (SHOP).”

SHOP is the insurance exchange, or marketplace, through which small businesses and individuals can obtain affordable, compliant health insurance coverage, Shepphard said. But the tax credit can only be claimed for any two consecutive taxable years beginning in 2014 if the insurance is purchased through the SHOP, she said.

Employers with more than 50 employees have already had to make changes to their insurance coverage since the law was signed to be in compliance and avoid paying penalties, Shepphard said, and more changes will come in 2015 when the law goes into full effect.

“In 2015, those employers with 50 or more employees must offer coverage to employees or be subject to penalties for not providing coverage,” she said. “The penalties in the law are for not offering coverage to employees and also penalties for offering coverage, but the coverage not being affordable for all employees.”

Companies are subject to fines of up to $3,000 per person left without affordable corporate coverage, according to CNN’s website.

The full law for businesses was pushed back from 2014 to 2015, giving employers more time to adjust and come into compliance with new laws, Shepphard said, but it’s also given businesses more time to find loopholes and ways around the new law.

LOOKING FOR LOOPHOLES

Many employers already are looking for ways to provide coverage to the least number of employees as possible to avoid paying penalties and to skirt providing health insurance, blaming it on the Affordable Care Act, according to CNN’s website.

A full-time employee who is required to be given health care coverage through an employer is someone who works 30 hours per week, according to the U.S. Small Business Administration’s website.

“I’ve heard a lot of businesses who have reduced hours for employees,” Chartier said.

United Parcel Service, better known as UPS, recently told employees it would be dropping coverage for employee’s spouses who were eligible for insurance elsewhere, citing that health reform is contributing a 4-percent increase to the cost of coverage for 2014, while health care inflation adds another 7.25 percent, according to CNN’s website. UPS representatives declined to respond to The Herald’s questions about the changes to their health insurance coverage.

Darden Restaurants, which owns Red Lobster, Longhorn Steakhouse, Olive Garden and others, tried to side-step the new laws by saying it would do a test period on limiting employee hours in an effort to avoid providing health insurance coverage to those employees not working 30 hours, according to the Washington Post.

“The company revised its earnings projections downward after seeing a backlash to the decision. Darden [soon] announced it had completed the test period, deciding it would not move forward with the limited-hours model,” according to The Post.

‘DON’T UNDERSTAND’

Officials for the City of Ottawa said the new health care law already has had an affect on the insurance coverage they offer to employees, but won’t know how the law will fully affect it until 2015.

“I don’t understand all of this. Thank goodness we have a broker who worries about these things for us,” Melissa Fairbanks, director of human resources for the City of Ottawa, said. “All I know is, based on what our broker told us, the impact we’re going to feel is less than those employers who are fully insured. We are self-insured, meaning we own our plan and fund it with our own dollars to pay claims.”

Businesses with more than 50 employees already have had to pay a small fee to fund the Patient-Centered Outcomes Research Trust Fund, Fairbanks said. The Patient-Centered Outcomes Research Trust Fund will assist, through research, patients, clinicians, purchasers and policy-makers, in making informed health decisions by advancing the quality and relevance of evidence-based medicine, according to the IRS’s website.

“This year, we had to pay a $1 per covered member fee,” Fairbanks said. “It’s not just a fee for employees. If there are spouses or children covered, it’s $1 per the number of lives we cover. Next year it will be $2 per.”

That fee was one of the first fees the City of Ottawa had to pay to come into compliance with new mandates to the law, Fairbanks said, as well as offering preventative care and covering birth control 100 percent.

“Those are minor [changes] compared to some fees we’re going to have to start paying,” she said. “Those are the ones that are going to hurt, especially the smaller employers.”

With businesses of all sizes still trying to understand the mandates of the Affordable Care Act, the U.S. Department of Labor is hoping its two-day webcast series can shed some additional light on struggles employers may still be facing.

The department’s Employee Benefits Security Administration is expected to play host to the two-day compliance assistance webcast from 2 p.m. to 3:30 p.m. Tuesday and Wednesday, according to a press release from the U.S. Department of Labor.

“The Affordable Care Act Compliance Assistance Webcast” is planned to provide employers, brokers, third-party administrators and others with practical information, helpful tips and clarification on the new law. Employee Benefits Security Administration staff are expected to be joined on the webcast by representatives from the Department of the Treasury and the Department of Health and Human Services,” according to the release.

To register for Tuesday’s webcast, visit http://ow.ly/oMs0z. To register for Wednesday’s webcast, visit http://ow.ly/oMrW1.

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