Health Care Hiccup

April 4, 2012 07:32 AM
Health Care Hiccup

Key aspects of new rules take effect in 2014

Farmers face a double-edged sword when it comes to health care. They are consumers who buy health insurance for themselves and their families, as well as small-business owners who must manage employee benefits. As such, the 2010 health care law could have serious consequences for rural health care and for small employers.

The U.S. Supreme Court must ultimately rule on the "mandate" part of the bill, which requires virtually everyone to have insurance. That means farmers with 50 workers or more—unless the workers are seasonal—must buy insurance for all employees beginning in 2014.

The good news is that farmers can qualify for a tax credit under the new law, providing they have
fewer than 25 full-time workers (two half-time workers count as one full-time worker), pay an
average wage of less than $50,000 per year and pay at least half of their employees’ health
insurance premiums.

For tax years 2010 through 2013, the maximum credit is 35% for farmers and other small business owners. This will increase to 50% in 2014.

"Seasonal" Defined. "The tricky part for farmers is that seasonal workers are not counted," says
Pat Wolff, director of tax and rural development for the American Farm Bureau Federation (AFBF).

A seasonal worker is loosely defined as one who works 120 days or less per year. Rules that define seasonal workers have yet to be released, Wolff notes. "If workers leave one farm and go to work on another, are they seasonal or full-time workers?" she asks. "We don’t know yet."

Beyond this important issue, farmers are affected in other ways by key provisions of the bill, most notably the one regarding state exchanges. These would allow farmers and others to shop for health insurance plans on the Internet, theoretically making health insurance cheaper. This provision, set for implementation in 2014, is being litigated under the contention that the federal government is improperly violating states’ rights of interstate commerce.

Brock Slabach, senior vice president of the National Rural Health Association, says that if the mandate is repealed, it’s possible that the state exchanges will not have enough people in them to work as designed and rates for farmers will not come down.

"Currently, close to 50 million or 16.7% of Americans are uninsured," Slabach says. "The bill would reduce the number of uninsured to 23 million by 2019, and one-third of those will be illegal immigrants." One real benefit of the exchanges is that they would make it easy to compare all available policies with regard to deductibles and co-pays, along with other benefits, Slabach says.

Farmers also will be affected by a new rule that bans insurance companies from barring those with pre-existing conditions.

Farm Groups Divided. The views of major farm organizations on the health care bill differ widely. AFBF is vehemently opposed to the mandates in the law. The National Farmers Union is supportive of the law, although disappointed that a "single-payer" provision was not part of the bill, says Roger Johnson, the group’s president.

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