No Simple Answers When It Comes to Affordable Care Act
April 1, 2013 (The Herald, Rock Hill, S.C.) It has been just over three years since President Barack Obama signed the Patient Protection and Affordable Care Act into law, and in about 200 days major provisions of the act are slated go into effect.
As Jerry Reed once sang in the movie "Smokey and the Bandit," we've got a long way to go and a short time to get there.
But we are not taking about beer. We're talking health care insurance and a complex system that involves the IRS, the Department of Health and Human Services, Homeland Security, Medicaid, the states, insurance companies, hospitals, doctors, actuaries -- just to mention a few of the interested and talkative parties.
And, of course, there are those who will pay for the insurance, who haven't been included in the ongoing conversations.
"The federal government isn't ready. South Carolina isn't ready and the insurance plans aren't ready," says Lynn Bailey, a Columbia-based health care economist.
Her prediction? Even with planned federal subsidies, "it won't be affordable insurance." With South Carolina opting not to accept money for the new Medicaid system or offering a state marketplace to buy insurance, "there's no way for South Carolinians to get plugged in," she said.
Kaiser Health News estimates that 20 percent of South Carolina residents are uninsured, compared to 16 percent nationally. Low-wage earners, estimated to be up to 500,000 South Carolina residents, would likely qualify for expanded Medicaid coverage. Eligibility in the new program would be based on income. People making less than 138 percent of the poverty level -- about $16,000 for a single person and $32,500 for a family of four -- would qualify.
Gov. Nikki Haley and the state House have said "no" to expanding Medicaid. The state Senate has yet to act.
A recent study by the Society of Actuaries predicts national individual insurance rates will increase by 31 percent nationally, 36.8 percent in South Carolina because of the Affordable Care Act. At least that's better than in Ohio, where the society predicts an 81 percent increase in claim costs.
The act is expected to have significant effects on businesses, especially among small businesses. But a recent survey by eHealth finds that most small business owners don't understand the act and are confused over whether they must offer insurance.
The simple answer is that the law requires everyone to have health insurance.
Businesses with the equivalent of 50 or more full-time employees have to offer those full-time employees health care that is affordable and meets required "essential health benefits" such as hospitalization, maternity and newborn care, mental health and substance abuse services, prescription drugs, preventive and wellness service, pediatric services and chronic disease management -- just to name a few of the essential benefits.
Companies with fewer than 50 employees, while not required to provide health insurance, need to inform employees about the law and make sure new health care plans -- if they offer them -- comply with the Affordable Care Act.
Companies with fewer than 50 employees can qualify for tax credits to help them purchase group plans under some circumstances.
Small businesses have the rest of this year to sort out what will be required of them and available to them as of next year.
Here are a few things that are key:
--The Affordable Health Care act defines full-time employment as 30 hours per week.
--The threshold for employee-offered insurance is the equivalent of 50 full-time employees. Some companies may be required to convert the number of part-time hours they have into full-time equivalents.
--There is a new category of worker, the variable worker. They may work 60 hours one week, none the next several weeks and then 60 hours again. If they average 30 hours a week over a reporting period, likely 12 months, businesses may be required to offer them health care benefits.
--Contract workers may be the responsibility of the business for health care insurance if the contract workers work solely for that business.
--Companies that use temp workers could also be responsible for health care insurance under some circumstances.
Those are just a few of the keys to counting employers. There is another set of new fees that come with the Affordable Care Act, some that will be paid by the insurer, some that will be paid directly by the insured. Assume that those paid by the insurer will get passed along to the insured.
Then there is the penalty for individuals and businesses that don't have or offer insurance plans. There are also sections of the act that define what is affordable care. As written now, a payroll deduction for health care can't be more than 9.5 percent of a household's income.
For those who qualify for a federal subsidy to offset some of the cost of insurance -- up to 400 percent of the federal poverty level -- be prepared to fill out lots of paperwork. The proposed form is 15 pages long for an individual, longer for families. Applicants will have to provide tax returns and employer names.
Watts Huckabee, of the Carolinas Insurance & Investment Group in Rock Hill, has been talking with his clients. Some business owners, Huckabee said, are trying to find ways to make sure they don't exceed the 49-worker cap. They are either not expanding or shedding some business, Huckabee said.
And that's just what's in the proposed regs today.
As Lindsay Voltz Norvell, vice president for employee benefits for BB&T Insurance Services, noted at recent Rock Hill presentation on the Affordable Care Act, she had to replace three slides for her talk the day before she arrived here because of new interpretations from Washington.
Best advice for small business owners now? Study the regs to understand how you will be required to count employees, the experts say. If you offer insurance, talk with the carrier.
And don't jump to the conclusion that shedding insurance is the best option. In some cases it may be more expensive overall and cost you quality employees.