The Affordable Care Act isn’t going away. In fact, it’s just starting.
Many a large dairy farmer with 50 or more employees exhaled a huge sigh of relief earlier this month when the employer mandate requiring health insurance was delayed until Jan. 1, 2015.
While it offers a reprieve, it is only that. The Affordable Care Act (ACA), or Obamacare as many prefer to call it, is alive (if not well) and kicking.
And here’s the thing: Even though large-farm employers received the reprieve, employees did not. Unless an employee’s income is less than $9,350 per year ($18,700 for a family), he or she will be required to obtain medical insurance somehow, someway, by Jan. 1, 2014 or face a penalty.
Granted, the penalties are miniscule in 2014 ($95 per adult, up to $285 per family, or 1% of family income, whichever is greater). But those penalties escalate to $325 per adult (or up to 2% of family income) in 2015 and $695 per adult (or up to 2.5% of family income) in 2016 and beyond. These, of course, are paltry penalties given the cost of health insurance. But employees will be forced to pay them if they cannot prove coverage—plus all health care costs as they occur.
Some farm employers with less than 50 full-time equivalent workers (full-time is defined under the ACA as 30+ hours week), might be tempted to drop the insurance they now offer to employers. It’s likely insurance premiums will continue to rise, so the thinking is that it will be cheaper to simply offer the dollars now paid for insurance to employees as a straight wage. Employees, in turn, could then purchase their own health insurance with that money.
"Some employers might view the [Federal or state] insurance exchanges as a safety net, which might provide a cheaper option," says Charles Stevens, an attorney with Michael Best and Friedrich, LLP, based in Milwaukee, Wis.
But the exchanges are still being set up, and premiums will depend on the age and income of the individual. At this point, it’s unknown whether the exchanges will offer viable, affordable products, he says.
Plus, any increase in wages will be subject to income taxes, social security, Medicare and retirement plan contributions. And if an employee’s earnings increase, disability benefits under worker’s compensation laws might also jump, potentially causing premium increases.
And then there the health/welfare/recruitment/retention component. If you stop offering health insurance as a benefit and a neighboring dairy offers it, will you lose employees?
None of these are simple decisions. The only prudent thing is stay in close, frequent contact with your newest best friend—your health insurance provider. Obamacare isn’t going away. In fact, it’s just starting.
You can read more on the Affordable Care Act here and here.