Employer health insurance mandate
— Employers with 100 or more full-time workers must provide them affordable coverage by Jan. 1, 2015 or face a $2,000-per-employee penalty.
— Employers with 50-99 employees must do so by Jan. 1, 2016 or pay a penalty.
— Employers with 49 or fewer employees are exempt from the mandate.
Some large employers in Georgia are facing a health care crisis of their own this fall: Should they offer their workers medical insurance next year or not?
That decision, which they are making now and will take effect New Year’s Day, will cost them either way. The issue for them is how to limit the financial impact while appeasing the federal government.
Under the “employer shared responsibility” provision of the Affordable Care Act, businesses with 100 or more full-time employees or equivalents must offer affordable coverage to most of their workers by Jan. 1, 2015 or pay a penalty. The employer mandate originally was supposed to begin this year but was delayed.
For most large employers, the mandate is nothing to fret over. According to the Kaiser Family Foundation, 94 percent of employers with 100-plus employees already offer health benefits.
The rest have a dilemma.
Companies of that size that don’t offer insurance in 2015 to at least 70 percent of their workers face a $2,000 fine for every employee beyond the first 80 workers on the payroll — if one or more of their employees receives a subsidy to buy coverage on a health insurance exchange.
In 2016 and after, they must offer coverage to at least 95 percent of their employees, or pay a penalty on each employee beyond the first 30 on the payroll.
Employers offering coverage must make sure it is deemed “affordable,” and that it meets certain standards. Otherwise, they could still face fines.
Businesses that have not offered health insurance previously would take on a cost that hasn’t been in the budget. Still, most are expected to offer coverage, though generally in the least expensive way possible, insurance brokers said.
“It would be surprising if very many people pay the penalty,” said Gary Claxton, vice president at the Kaiser Family Foundation.
Andrew LaRocco, partner at The LaRocco Companies, a Norcross insurance consultant, summed up the quandary of one employer he is working with, a restaurant group with about 170 full-time employees.
“They don’t want to pay a penalty,” he says, “but (insurance is) a big added cost.”
Brokers pegged the cost to an employer to provide employee-only health insurance at about $250 to $300 per employee per month.
The employer mandate doesn’t extend to smaller employers next year, but it will in 2016. Then, businesses with 50 to 99 full-time workers must offer coverage or face penalties. Employers with fewer than 50 workers are exempt.
The restaurant, hospitality and retailing industries are most likely to be affected by the new requirement. Businesses in these fields typically have not provided health insurance to most of their workers. Employers and health care analysts say many of those workers can’t afford insurance, or they don’t want it because they tend to be young and healthy and feel it’s unnecessary.
Under the ACA, neither employer nor employee has a choice, though. Individuals, like their employers, face a fine if they go without coverage.
Most employers facing the mandate who were asked about their strategy declined to discuss their plans publicly. They said, however, that they don’t offer employees insurance because their workers don’t want it, and that if they did offer it in the past, workers didn’t take it.
Employers also said that the extra cost they will incur to provide coverage can’t easily be passed on to their customers through higher prices, because they could lose business to competitors.
Brokers who work with employers talked about what their clients are contemplating.
The “vast majority of employers facing the mandate will offer coverage rather than pay the penalties,” said Atlanta benefits and insurance consultant David Bottoms of The Bottoms Group.
Many, he said, are going with plans that offer the minimum level of coverage that is required at the highest price that’s still considered affordable to workers.
For insurance to be “affordable,” the employee’s cost for coverage can’t exceed 9.5 percent of the employee’s income. That’s still a fairly big chunk of income, particularly for a relatively low-wage worker, brokers note.
As a result, many employees won’t take employers up on their offer of insurance.
While that would save companies money in a way, it presents another problem.
If only a few workers at a company take the coverage that’s offered, the employer will not meet the insurance company’s minimum participation requirements. If the requirements are not met, an insurer might decide to not offer the policy, said Jodie Braner, vice-president at benefits and insurance consultant Hays Companies and president of the Georgia Associations of Health Underwriters. If they do provide insurance, the price of the coverage would be re-evaluated based on the new risk pool and could increase significantly.
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