Caring about Obamacare
New health care requirements are about to change the way you do business. And whether you believe it is for better or worse, you have to be ready to deal with them.
The Affordable Care Act, also known as Obamacare, is being rolled out in an undetermined number of stages. That’s because the legislation itself keeps evolving.
When it first passed through Congress more than two years ago, the legislation was reportedly some 2,400 pages long (although the draft available on the heathcare.gov website is less than 1,000 pages). Today, Obamacare regulations take up more than 10,500 pages of the Federal Register.
The troubled healthcare.gov website also is causing delays, especially for individuals. The result? Many of the reforms will not go into effect until 2015.
If your full-time equivalent employee count is 50 or more, then you are classified as a large business. Note I said “equivalent.” Obamacare, which defines “full-time” as 30 hours or more, takes part-time employees into consideration.
To determine how many full-time equivalent employees you have, divide the total number of hours your employees work by 30. If the number is at least 50, then you are considered a large business under Obamacare.
The key provisions of Obamacare that will affect large businesses will not go into effect until 2015. They include being totally transparent by informing your employees about their health insurance options immediately. This is regardless of plan enrollment. Also, employers are required to provide employees with a standard “Summary of Benefits and Coverage” form. You can be penalized for non-compliance.
Contrary to popular belief, however, Obamacare does not require any business to offer health insurance to its employees as long as no one in the company receives health insurance. However, it does require employers to “share responsibility” for the cost of health insurance to their employees. This is either a fee or a penalty, depending on your point of view. The idea is to make sure it is “affordable” to them.
The same theory applies to a company that does offer health insurance. For example, if an employee's share of the premium costs for employee-only coverage is more than 9.5% of his wages, chances are it is not affordable. And guess who will make up the difference?
Michael Lichman, president of the Association of Business Solutions, touched on these issues at the recent Global Tire Expo in Las Vegas.
“In terms of some of the other issues employers face, maybe one of the most critical is discrimination and discriminatory plans,” he told attendees to the “Understanding the Patient Protection and Affordable Care Act” seminar.
“We see a lot of employers who are only offering insurance to executives… and that will be regulated. The goal of the health care reform is that everybody be offered the same thing.
“You can offer different levels of plans, you can have different levels of contributions, but you are constrained in your contributions. The lowest cost plan can’t charge more than 9-1/2% of income of the lowest earning person’s annual salary for their coverage.”
Although there are some very strict formulas on how you can charge employees for their health insurance, there is a flaw, said Lichman. The 9-1/2% only applies to the employee’s coverage. “So you can charge them 9-1/2% for their simple coverage, but you can charge them the full difference for their family coverage.”
If you manage 50 full-time employees or less, you are classified as a small business. (Yes, healthcare.gov defines a company with exactly 50 full-time employees as both small and large.) As such, you most likely will not be required to share health insurance costs if you choose not to offer insurance to your employees. However, if you choose to, Obamacare has set up SHOP, the Small Business Health Options Program, for your use.
If you take advantage of SHOP to compare coverages, you will be able to control the coverage you offer and how much you pay toward employee premiums. In addition, you may qualify for tax credits.
“There is a SHOP Marketplace in each state,” according to healthcare.gov. “You must have an office or employee work site within the SHOP’s service area to use that particular SHOP.”
The program will be launched online in November 2014. Beginning in 2016, all SHOPs will be open to businesses with up to 100 full-time employees.
Your attorneys and accountants should be aware of Obamacare’s reporting requirements and tax implications for this year. But you are ultimately responsible for understanding Obamacare going forward. If you start now, you probably will be able to read all 10,535 pages (and counting) in the Federal Register by 2015.
Other sources that will help you stay on top of the changes include the United States Small Business Administration (www.sba.gov); the Specialty Equipment Market Association, through its Political Action Committee, or PAC (www.sema.org); and the Tire Industry Association, through TirePAC (www.tireindustry.org).
Whatever you do, just don’t wait until the last minute.
If you have any questions or comments, please e-mail me at email@example.com.