Insurance penalties delayed - now what?

With looming penalties for small businesses that don’t provide health insurance delayed a year, business owners are temporarily freed from financial burden and exploring their compliance options.

The U.S. Treasury Department’s far-reaching decision July 2 at the request of the Obama administration means businesses near the 50 full-time equivalent threshold have another year to decide whether they should secure a company health plan or pay a fine based on their number of workers.

Penalties under the Affordable Care Act were scheduled to begin Jan. 1 for businesses with more than 50 full-time equivalent employees that don’t provide health care insurance plans. The new deadline is Jan. 1, 2015.

David Hunt, managing consultant for Springfield-based accounting firm BKD LLP, who has 30 years of experience working with health care providers, said the Treasury Department rightly responded to concerns by businesses nationwide.

“There had been an exceeding amount of feedback from businesses that were going to be affected by these mandated deadlines. There were still so many practical questions about how this was going to be implemented,” Hunt said, pointing to overall business costs, as well as administrative and software issues.

According to nonpartisan health care policy tracker Kaiser Family Foundation, companies with 50 or fewer employees are exempt from penalties, while those with 51 full-time workers or more will be fined $2,000 per employee – excluding the first 30 employees – for not providing coverage to those who put in more than 30 hours per week. Employers aren’t penalized for not covering part-time workers.

As someone who has tracked Medicare and Medicaid policy changes throughout his career, Hunt said it is not uncommon for the government to shift impending deadlines.

“It seems like there is a common pattern: pass new legislation, set a due date, get everybody in an uproar about the implementation of it, get everybody thinking seriously about it, and then when you get near the deadline, they extend it,” Hunt said, adding there is a benefit to these sorts of delays.

“That gives people a chance to further digest how it is going to impact their companies.”

Ray McCarty, president of statewide business-advocacy group Associated Industries of Missouri, said the delay substantiates concerns that AIM and other business groups nationwide have voiced to lawmakers about the ACA rules.

“It lends credibility to what we’ve been saying all along that there are so many details left for the administration to decide that even they can’t get that done in a time frame that makes sense,” McCarty said. “We are happy to see that they have delayed this bad idea for another year, but the chickens will come home to roost at some point and it is still a problem.”

John Akers, co-owner of Branson-based insurance firm Akers & Arney, said a majority of employers along the Highway 76 strip employ seasonal workers and don’t provide health insurance or only provide it to a core group of employees. Akers said his clients and agents are breathing sighs of relief.

“As we sit here today, the feds – because that’s who is running the exchanges in Missouri – have not released pricing for next year. The carriers haven’t released it, so there are so many variables that employers don’t have that make it really hard to plan,” Akers said. “Hopefully, with a lot of these unanswered questions, in a year’s time, those answers will be here.”

For those seasonal businesses, Akers said he and his staff have generally told people through meetings and seminars during the last couple of years to wait and see what happens.

“The law as it is currently written is unworkable. There are certainly people who support it and believe there are good intentions, and that’s true, but the way it is written doesn’t work. The government needs to either modify it, so it could be something that could be implemented, or it needs to kick the can down the road, which is mainly what it did. My advice to clients at this point is, ‘Just hold on,’” Akers said, adding elections in 2014 could impact the mandates and penalties that come to pass.

In an ironic twist as it’s currently written, the law might impede his insurance company from even offering health plans to staff.

Employers with fewer than 50 full-time equivalent workers that do not provide insurance avoid penalties, complicating some cost-related assumptions in the law. At Akers & Arney, an 18-employee firm that has provided health insurance for its workers for more than 20 years, it might be more beneficial for employees to get their insurance through a state exchange that subsidizes their coverage.

“It may make more sense for me, going forward, to drop our insurance plan,” Akers said.

 “If they can buy it cheaper on the exchange than I can provide it for them, then I’d actually be doing them a disservice to have a health plan,” he said, noting the law was not designed to encourage small employers to drop their health plans but it might shake out that way. “All of the (numbers) the administration has used regarding the costs assume businesses will continue to offer health insurance that already offer it.”

According to data from health care reform supporter Families USA, the delay could be a nonissue for many businesses. The organization reports 94 percent of businesses with 50 employees or more already provide health insurance for their employees.

On Capitol Hill, the delay has generated criticism from area Republicans.

Sen. Roy Blunt, R-Missouri, on July 11, co-sponsored the Obamacare Repeal Act to defund the health care reform law.

“Three and a half years ago, the law was signed into effect. Three and a half years ago, executing the law became the responsibility of the president of the United States. Now, every single election (the administration) says, ‘Well, we can’t put this out there; we can’t fulfill this part of the legal requirement until sometime after people have voted again,’” Blunt said in a July 10 speech on the Senate floor.

Last week, Rep. Billy Long, R-Springfield, called for a full repeal of the ACA.

“The need for this action delaying the implementation of Obamacare further illustrates the need to completely repeal the entire law,” Long said in a news release. “Obamacare’s complex mandates and increased costs threaten the health care of all Americans, especially hardworking Americans who like the coverage they currently have and will lose it.”