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Insurance Checkup, Health-Care Reform

January 7, 2013
By: Ed Clark, Top Producer Business and Issues Editor
healthcare
  
 
 

What the health-care law means to farm families and rural America

The red-hot rhetoric over healthcare reform has toned down to a slow burn. Now in implementation mode, the Patient Protection and Affordable Care Act will steadily unfold for the next five years.

Regardless of where you stand on the act, which mandates all Americans carry health insurance, there are benefits in the fine print for both farmers and rural America, contends Brock Slabach, vice president of the National Rural Health Association.

"I grew up on a farm. I know there is the perception in rural America that Obamacare is bad," he says.

Results of a recent AgWeb poll support that statement. Of the more than 1,500 respondents, just 11% said they believe the health care act will improve coverage for their families, while 74% said the law would make it worse. Seven percent said the act would have no major effect on their family’s insurance coverage, with an equal number saying they were not sure.

State exchanges. This year, the part of the health-care law that relates most to farmers—the state exchanges, a centerpiece of the law—will start to take shape, with full implementation scheduled for early 2014.

Right now, each farmer is a pool of one, so farmers’ cost of insurance is quite high relative to the cost for people who work for large companies and organizations, says Jon Bailey, director of research and analysis at the Center for Rural Affairs. The state exchanges will work by forming insurance pools of hundreds of thousands of people. As a result, coverage options will increase and rates will go down, Slabach explains.

It’s no different than buying seed. If you buy one bag of seed, you pay a different rate than if you buy a thousand bags. Another key element, in Slabach’s view, is that the state exchanges will make it easier to compare apples to apples when it comes to deductibles and co-pays.

The percentage of Americans who will be insured will increase from about 80% today to a goal of 92% under the new law, contributing to the large pools that will help increase coverage and lower rates.

The state exchanges will have physical brick-and-mortar locations in addition to websites. Farmers can visit these "insurance stores" to discuss price, coverage and other issues with experts who can help them compare policies and plans.

"The exchanges offer a real service to farmers," adds Chandler Goule, vice president of government relations for the National Farmers Union and a strong supporter of the health care act.

While coverage might vary from state to state, Goule says, there will be a minimum coverage requirement.

Pre-existing conditions. Under the act, insurance companies can no longer discriminate against people with pre-existing conditions. A 60-yearold farmer with arthritis or diabetes, for example, will be able to join a state exchange and will not be forced to accept lower coverage or higher rates, Slabach says. In addition to that, lifetime coverage caps will be banned. The law will also extend Medicaid coverage and insurance subsidies to all low-income Americans.

Tax hike. Key provisions of the law will not be available free-of-charge, which is one reason—in addition to the mandates—that some opponents have stood firm against the law. Farmers who fall within certain tax brackets will be hit with higher taxes to create revenue to help pay for the expanded health care. For example, a single person with income from selfemployment in excess of $200,000 will be subject to an additional tax of 0.9%. The threshold amount is $250,000 for a  married couple filing jointly.

An additional Medicare tax of 3.8% will apply to unearned income, specifically the lesser of net investment income or the amount by which adjusted gross income exceeds $200,000, notes Patricia Wolff, senior director of congressional relations for the American Farm Bureau Federation. The organization is a strong opponent of the health care act.

While the exchanges are central to health-care reform, rural communities will also benefit from other provisions, some say. Most important, perhaps, is the part of the law that is designed to increase the number of health-care workers in rural hospitals, doctors as well as nurses.

How the Patient Protection and Affordable Care Act Will Unfold

January 1, 2013

Income from self-employment and wages of single individuals in excess of $200,000 annually will be subject to an additional tax of 0.9%. Threshold amount is $250,000 for a married couple that is filing jointly. The 3.8% Medicare surtax on unearned income begins.

States and the federal government finalize state exchange provisions.

January 1, 2014

A penalty of 1% of income over the filing minimum on individuals who are not covered by an acceptable insurance policy. This increases to 2.5% of the income over the filing minimum by 2016.

Health exchanges are established and the subsidization of premiums for individuals in households with income up to 400% of the poverty line.

Two years of tax credits (50%) are offered to qualified small businesses which pay for health insurance benefits, have fewer than 10 full-time equivalent employees and an average salary of no greater than $25,000. Seasonal employees and owners and their families are not included.

The subsidy is reduced at higher income levels, 3.35 percentage points per additional employee and 2 percentage points per additional $1,000 of compensation.

January 1, 2018

All existing health insurance plans must cover approved preventive care and checkups without co-payment.

A 40% excise tax on high-cost insurance plans is introduced.

Employee Considerations

Only producers with 50 or more full-time worker equivalents are required by the Patient Protection and Affordable Care Act to provide health insurance for their employees, says Patricia Wolff, senior director of congressional relations for the American Farm Bureau Federation. (Two half-time workers equals one full-time worker.)

Farmers—and other small businesses—do qualify for tax credits under the law, provided they have fewer than 25 full-time equivalent workers, pay an average wage of less than $50,000 per year and pay at least half of their employee health insurance premiums. For the 2010–13 tax years, the tax credit for small business employers is 35%. The tax credit increases to 50% on Jan. 1, 2014, and can be carried forward or backward.

For additional perspective on the new health-care measure, visit www.FarmJournal.com/health_care

You can e-mail Ed Clark at eclark@farmjournal.com.

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