Businesses next in health-care changes

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Some employers in Shelby still have questions about what the Affordable Care Act would require them to do.

By Lisa King

With thousands of Kentuckians – and millions of Americans – as of this month having health insurance through the Affordable Care Act and more signing up each day, a new impact of the law will emerge this year as many businesses wrestle with the requirement that they must provide insurance options for their employees.

That aspect of the law was delayed until 2015, and some say that has allowed confused business owners the opportunity to learn about their responsibilities – if they even are paying attention – and even to consider simply paying a fine rather than trying to create an employee insurance program or sign up through the state’s health-care exchange.

The Affordable Care Act is designed to provide health insurance to many Americans who didn’t have access to it, couldn’t afford it or were denied insurance because of their age or status of their health.

But it also requires each individual to have insurance – either through an employer, privately or through a state-coordinated exchanges – or to pay a penalty.

That goes for some businesses as well.

Companies that employ more than 50 would be fined $2,000 per year for each employee, excluding the first 30 employees, if they do not provide health insurance for employees who average 30 or more hours per week.

“As a businessperson, I think we should be able to offer our employees insurance to help them take care of their families, but there are still some things I need to check on,” said Yolanda Bradford, who owns accounting service in Shelbyville that has 14 part-time and one full-time employee. “I know we have to offer health insurance, but I’m not sure at what level.”

But how much do owners of Shelby County’s smaller businesses know about this new plan? They don’t appear to be asking many questions.

Eileen Collins, executive director of the Shelby Development Corporation, said last fall that the topic hadn’t arisen in her conversations with businesses.

“Actually, I haven’t heard anyone say anything about it, and that’s unusual, with as many people as I talk to in a day,” she said. 

Sharon Nichols, who owns Flowers by Sharon, a florist in Shelbyville with only a handful of employees, said she hadn’t heard any discussions among businesses.

Shelley Goodwin, executive director of the Shelby County Chamber of Commerce, attributed that to the change in the timeframe of penalties that would be assessed to businesses that are not in compliance.

 “I have not had any conversations specific to that with any [chamber of commerce] members,” she said. “I think that people are waiting to see what happens, and with the employer mandate being pushed back to next year, it’s kind of taken the pressure off.”


State Chamber helping

Margaret Levi, an attorney with Wyatt, Tarrant & Combs, a Louisville law firm that conducted an informational seminar in November for business owners, coordinated by the Kentucky Chamber of Commerce, described how the penalties would work for businesses.

“There are two different set of penalties. If they [businesses] do not provide any insurance at all, and for those that provide insurance, but it’s not good enough or cheap enough,” she said. “If it doesn’t meet certain standards, the penalty is three-thousand dollars per year for every employee that decides not to get the employer’s insurance and instead goes and gets it through the government.”

Ashley Watts, communications director for the Kentucky Chamber, said that organization is the biggest resource for businesses seeking information about how the ACA will impact them.

“We have been getting a lot of questions and calls. People are just uncertain about what’s going to happen, and we realize there are a lack of resources out there for businesses, so we have just put ourselves out there for that purpose,” she said.

Watts said she has been busy trying to help businesses be prepared.

“We are doing this because we realize that this is the number one issue facing businesses,” she said. “I have also spoken at about twenty chambers during the past six or seven months on what businesses need to know.”

Goodwin said that she has not been involved with any of the educational sessions that the KCC has to offer.

“At three hundred dollars [per session]?” she said.

She said her chamber provided a Webinar to help to explain the issue.


What do businesses need to know?

But Barbara Gordon, director of social services at Kentuckiana Regional Planning and Development Agency, said there might be a slight bonus built in for small businesses.

“Employers who have fifty or fewer employees are not required to purchase insurance for their employees in the exchange, but they can if they wish,” she said. “Tax credits may be available to businesses who employ twenty-five or fewer employees.”

Levi said that the tax credit only would be available to small businesses.

“For medium sized businesses, that employ from twenty-five to fifty, there’s not really a lot of incentives or mandates, but for small employers, those with twenty-five or fewer, there are some tax subsidies that are available to help them provide health insurance to their employees,” she said. “They’re not legally required to do it, but there’s some help, if they decide to.”

Levi said she doesn’t have all the details on tax credits, except that small businesses of 25 or fewer employees must contribute 50 percent toward the health-care costs of employees to be eligible for a tax credit.

“I’m not exactly sure of the mechanism of how it will work; it’s still to come,” she said.


Trying to learn

Kentucky has been one of the nation’s most successful states in rolling out its exchange, kynect.gov., and within that exchange is a small-business optional program (SHOPS), which offers qualified health plans to businesses with 100 or fewer employees.

Gordon said the system at Kynect.gov was overwhelmed for a while, because it had succumbed to the load of people signing on to process their applications for the coverage.

 “Good luck in getting through,” Nichols said.

But she said that, although she wants to learn more about the program, she is not overly concerned.

“All of my employees are insured through their spouses,” she said. “I don’t have enough employees to require me to provide insurance for them, so it hasn’t affected me one way or the other. Because you have to have five employees, and I don’t have that many.”

Mark Skillman, manager of Shelbyville Asphalt, which has five employees, said he has not dealt with the issue at all, and at FB Purnell Sausage Company in Simpsonville, which employs 250, and already offers insurance, the questions are more about how that program would be affected.

“We’re still just trying to learn about it,” President Todd Purnell said. “Our insurance company is still waiting for all the dust to settle enough to really tell us what we’ve got to do. We don’t know how it will go yet. That’s the scary part.


Pay the penalty?

Skillman said he thought many young people would elect to pay the penalty rather than pay for insurance, because they wouldn’t use the insurance that frequently. That could drive up premiums for every else, he said, because those young people are the portion of the population that would be least expensive to insure.

Levis said that’s an opinion that has been expressed by many.

“What they’re [employers] afraid of is that people with really bad health who have not gotten insurance in the past, either because of a pre-existing condition or whatever, now these people are going to be in the same insurance market pool, and that is what they’re afraid will drive the prices up,” she said. “They’re a higher risk, but everybody is going to be paying the same rate, so people are going to be paying for the folks with greater health-care needs.”

And along those lines she said that she thinks having to pay a fine could be still be a more attractive alternative to some businesses.

“Many employers are finding that it [the fine] is still less than the cost of actually providing insurance,” she said. “The average cost to provide insurance? I don’t know, but I’ve seen individual companies run the numbers, and it’s way more to provide insurance than it is to pay this penalty.

“They may choose to pay the penalty, but the other thing you have to realize is that it’s not just about meeting the law; you also have to think about employee satisfaction. So you can’t do it strictly on a dollar basis. You have to factor in employee satisfaction into the analysis.”

More information

FAQ WEB SITE:www.healthreform@kychamber.com


HEALTH CARE EXCHANGE:  855-4kynect (459-6328) or 855-326-4654, or visit www.kynect.gov.