Figuring out what the premiums and co-pays will be for an individual participating in the state’s insurance exchange is difficult enough, but the math gets even more complicated for employers of all sizes.
Last month, President Barack Obama delayed the penalties until 2015 for companies with more than 50 employees that don’t offer health insurance. But that doesn’t mean those companies in both the private and nonprofit sector can sit on their hands and do nothing for a year.
“It’s a complex and scary world for nonprofit executives,” David Burnett, executive director of Reliance House in Norwich, said Tuesday.
Burnett is one of about 100 people who attended a “Healthy Nonprofit Chat” about the Affordable Care Act and Connecticut’s marketplace on Tuesday to figure out what it means for his nonprofit.
Terry Edelstein, the governor’s nonprofit liaison, said the new law will have implications for group homes or others offering residential care because there’s a health and safety requirement that mandates client care 24 hours a day. She said that if you have three shifts and someone calls out, it’s possible that calling in another employee to cover the shift would put someone above the 30-hour-per-week trigger.
If an employee works on average more than 30 hours per week, then the company has to offer them insurance because they’re considered a “full-time equivalent.” That change alone means that companies of all sizes need to begin tracking how many hours their employees work to figure out what their liability is under the new law.
Burnett said the margins under which he operates are paper thin since the state neglected to increase funding 16 out of the last 20 years for nonprofits contracting with the state.
In the past two years his insurance costs have increased 36 and 25 percent. Burnett renews his contract with his insurance carrier in February so he’s not sure if the new law will make a difference in cost, but he doesn’t plan on dropping coverage for his 260 employees. He said he’s maintained health insurance benefits over the years, while reducing wages and finding other creative ways to retain his workforce.
But there are companies who don’t believe as strongly as Burnett that workers should have health insurance, so some are looking to reduce hours in an effort to avoid offering it.
Daniel Colacino, vice president of the New York brokerage firm Rose and Kiernan Inc., said payroll firms are able to track employee hours for companies. At the end of the year the payroll company does the averaging for a business.
“Unfortunately some are charging for that,” Colacino said.
He said the calculation has to be done every year and it may be an issue for businesses such as restaurants where there are a lot of employees who work around 30 hours a week.
“How do you prove an employee is intentionally being made to work 29 hours? I don’t know,” Colacino said.
Whether the reduction in hours to avoid offering health insurance is an “abuse” as defined under the law will be up to the Internal Revenue Service to determine on a case-by-case basis.
“Is it a business reason that you’re reducing the hours? And how can you say avoiding health insurance is not a business reason because it costs money,” he said, adding that his firm encourages its clients to keep those decisions about employee hours private.
Beginning in 2015, there will be penalties for large employers not offering coverage and penalties for offering unaffordable coverage to employees. Those penalties are not tax deductible.
On the other hand, small businesses under 50 employees may be eligible for a tax credit. The calculation on that is complicated as well, but if 10 full-time equivalents are paid $450,000 in wages and the company pays $20,000 in premiums, then the tax credit would be $4,600.
There are two small business tax calculators. One is at http://www.smallbusinessmajority.org/tax-credit-calculator and another is at http://www.nfib.com/advocacy/healthcare/credit-calculator.
The rates for the individual and small group market were finalized Monday by the state Insurance Department so consumers have some idea about what they may have to pay if they want to join one of the plans offered by the exchange.
Lt. Gov. Nancy Wyman, who co-chairs the Access Health CT board of directors, said she’s pleased with the rates.
The state legislature was unable to pass a bill that would have required the board of directors to actively negotiate with the carriers over rates. The board voted against the idea last year but the Senate passed a bill that would have instituted active purchasing. However, to the dismay of advocates, it was never called for a vote in the House.
“The reason companies dropped out is because the Insurance Department thought they should be able to come in with lower numbers, so I think that the Insurance Department did a good job in negotiating rates,” Wyman said Tuesday.
Ellen Andrews, the executive director of the Connecticut Health Policy Project who lobbied for active purchasing, is waiting until the ink dries to comment on the rates released Monday. She said she still wants to see the provider networks and co-pays and other out-of-pocket expenses before making a judgment.
“The devil is in the details,” she said Tuesday.
Another “Healthy Nonprofit Chat” will be held 9 a.m. Wednesday, Aug. 7, in Room 2C of the Legislative Office Building.