Dose of reality has peculiar taste
BY KATHY KAHN
Special to The Rockland Times
Does Obama care? Americans do and they certainly hope the president’s plan to provide health insurance to all is going to work. The Affordable Care Act is about to arrive in full force this October, 2013.
New York opted to set up its own health insurance exchange program rather than letting the federal government do it, using one of the largest insurers, Oxford EPO, to serve as the benchmark for the 10 categories of coverage plans the ACA requires the health care exchanges to offer.
ACA compliance has left many small and mid-sized businesses in a quandary. Those with two-49 employees can continue covering staff by buying private health insurance from a broker, though it’s likely a large percentage of employees will be eligible for coverage through the health care exchange.
A caveat for small businesses: hours put in by part-time staffers may put that small business into the over- 50 employee mark. Because of the complexities small businesses face, the Dept. of Health & Hospital Services pushed back these exchange programs to 2015.
For those with 50 or more employees, those employees must be offered coverage lest the employer pay a $2,000 per person penalty and will be assessed annually. These penalties cannot be deducted as business expenses.
How does a person qualify? It has been suggested that individual’s yearly W-2 serve as a guide to eligibility; however, the number of members in the household and other income may come into play to determine whether an individual is eligible for entry into the exchange program.
How will you determine whether you are eligible? Hopefully, those guidelines will be in place by October, when the healthcare exchanges officially start signing people up.
Lev Ginsburg, attorney and director of government affairs for the Business Council of New York, explained the nuances of the ACA to Rockland Business Association members at a recent lunch at Rockland Country Club. Ginsburg played to a full house, where most tried to grasp the mind-numbing numbers Ginsburg laid out when it came to potential penalties, paperwork and pitfalls for failure to comply with the new law.
According to Ginsburg, one million people will gain insurance and nearly 1.1 million will be taking part in the exchanges. While health insurance has traditionally been an offering made to employees as a benefit, the downside is ACA may also result in the reduction of the moral or societal obligation of employers to maintain traditional group insurance.
“With the number of options on both the public and private exchanges,” Ginsburg said “the shift from defined benefits to defined contribution is ripe…some small business owners will inevitably drop coverage for employees altogether.”
Other “surprises” for business owners: An “Insurer Tax” (HIT) to be imposed on insured policies and possibly costing up to $400 annually per policy; and what has been dubbed a Transitional Reinsurance Fee on health insurance companies and on plan administrators on behalf of self-insured employers is estimated to be $63 per person enrolled in a plan in 2014, a total of $10 billion expected to be collected the first two years ACA is in place.
Ginsburg said there are choices for small businesses: They can offer traditional coverage by using direct purchase, going through a broker or taking advantage of a chamber of commerce insurance program; or by making a direct purchase through the Affordable Care Act.
Some may offer employees a “defined contribution” towards their healthcare; and some may opt to drop coverage altogether.
The Business Council attorney said the ACA may result in the reduction of the moral or societal obligation of employers to maintain traditional ground insurance. “This, coupled with a myriad of options on both public and private exchanges, the shift from defined benefit to defined contribution is ripe.
There has been some tweaking done of the original wording of the ACA, but in the opinion of many luncheon guests, mystery surrounds how Obamacare will play out for the average worker. “Some people aren’t going to worry because they have a health plan that can’t be touched,” said Suzy Godding, Secure Card Services in Ramsey. “But for many of us, it’s a ball of confusion.”
While most businesses, large and small, depend on their brokers and accountants to guide them in offering health and other benefits, “If they aren’t already, your broker and your accountant are going to become your best business friends,” Ginsburg told RBA guests.