The effects of the Affordable Care Act could be as long as the document itself, according to Tim O’Hayre of BB&T Insurance Services.
O’Hayre laid out how the sweeping health care reform package will affect small business during the Effingham Chamber of Commerce’s membership breakfast last week. Many major provisions of the law won’t go into effect until next year. And just how companies and employees are expected to comply with the nearly 3,000 pages of the law and its approximately 15,000 pages of regulations.
“It’s a very complex, cumbersome bill,” O’Hayre said.
In spite of the paperwork the law has generated already, O’Hayre cautioned business owners not to get discouraged.
“Don’t let this bill dictate your business model,” he said. “You do what you need to do. It’s not as bad as it looks; it’s not as bad as it appears.”
Businesses with fewer than 50 employees won’t be affected by the ACA, O’Hayre said.
“If you have more than 50 employees, then what you’re going to have to do is what I’m going to do to get every business prepared,” he said.
How the government will count employees doesn’t necessarily mean 50 full-time workers as the baseline, O’Hayre pointed out. A business, such as a restaurant, could have five full-time workers. But 100 part-time workers could be counted as enough full-timers to put the business’ workforce at the threshold.
Businesses that don’t offer health insurance will face a $2,000 penalty per full-time employee. The average premium in Georgia is about $400 per month. That means businesses will face a decision, O’Hayre said, of what’s cheaper — paying the penalty or offering insurance.
“If you offer coverage and it doesn’t meet specifications,” he said, “they’ll charge you $3,000.”
But part of the bill allows employers to exclude up to 30 full-time employees.
“If they wanted people to have health coverage, why’d they do that?” O’Hayre said.
Employers don’t have to offer benefits to part-time employees, those working fewer than 30 hours per week. Employees who are offered coverage can elect to decline it.
“You only have to offer benefits to those working more than 30 hours per week,” O’Hayre said.
Employers also can charge up to 9.5 percent of a worker’s income on their W-2s.
Employees will have five coverage options available Jan. 1, 2014 — Medicaid, Medicare, Tricare (the military health coverage plan), employer-provider insurance or through an exchange or a private policy.
There are still many problems with the bill’s provisions, O’Hayre said. Currently, an estimated 50 million Americans do not have health insurance. The ACA will cover only about 20 million, O’Hayre said.
“It’s going to affect employees as much employers,” he said.
It also will have an impact on how businesses attract and retain good employees, O’Hayre said. Several large corporations are weighing whether to drop their coverage and allow their workers to enter into the health care exchanges and pay the penalty per employee.
“If you can charge an employee $400 a month, is it going to be less expensive to pay $200 a month on a pre-tax basis or $168 after taxes?” he asked. “That dynamic alone has changed how business owners view this bill. This is going to affect how they judge that compensation package.”
Deadlines for implementation of parts of the law have not been met, and O’Hayre is not convinced the entire package will be enacted when it is scheduled to do so.
“We’re not sure the main components of the bill are going to be put into effect,” he said.
The state was supposed to announce March 1 if employers were going to be able to take part in a state exchange, O’Hayre pointed out.
“That day has come and gone, and the feds have said they are not ready to put this bill in place, even on Jan. 1, 2014,” he said.
The exchanges, O’Hayre explained, are going to be clearinghouses where data will be collected. They will want information such as current address for yourself and your spouse, your current employer, your spouse’s employer, what benefits are available for your spouse and your children, among other items. With that information, the government will be able to tell if you have been offered coverage by your employer and if you declined it, if offered.
Under the law, spouses are no longer considered dependents.
“Children are now the only dependents,” O’Hayre said. “It’s going to change the whole dynamic of the market.”
Employers won’t have to pay the $2,000 fine for not offering an employee insurance, if that employee declines the coverage. Employees who opt to go into the exchange will have to ask for the premium tax credit on their tax returns but that could take 14 to 15 months to be included in any refund, O’Hayre warned.
Since the penalties for individuals who turn down employer coverage and don’t otherwise seek insurance are going to be added to tax returns, O’Hayre sees a big problem with collecting that sum. It is estimated that 42 percent of people do not file a tax return.
“It has no teeth; it has no bite,” he said.
Part of the government’s plan will be funded through taxes on medical devices and there will be excise taxes on so-called “Cadillac” health insurance plans starting in 2018. More than 1,700 union plans that fall under the “Cadillac” tag have been exempted, O’Hayre said.
“The unions collective bargaining has gotten involved — if you’re a union and you go to the exchange, you’re not going to be able to get coverage because you declined coverage through your employer,” he said.
Seventeen states have set up exchanges, for those who are not offered insurance or decline it, and Gov. Nathan Deal declared last November that the state will not set up its own exchange for health insurance. O’Hayre noted that three years ago, there were 17 major medical plan companies doing business in Georgia. That number is down to six, and it appears states will pick from three to four top insurance carriers to be the plan administrators.
“The question is what network they’re going to use,” he said. “Are the doctors you want to use in the exchange network? Nobody has the answers to these questions.”
O’Hayre said it looks as if Medicaid will fill the role of coverage provider in the exchanges “which means you’re going to have a serious problem with doctors.”
O’Hayre also had one more piece of advice for business owners and employers.
“Find a good employment attorney,” he said, “and be in contact with him.”