What does Obamacare mean to business and employees

Source: St.儲存倉 Louis Post-DispatchSept. 28--Most working people get their health insurance through their employer. If you're one of them, here's what the Affordable Care Act means for you in 2014:--If you work for a big company that offers a decent health plan, not much.--If you work for a small firm that offers coverage, maybe a significant change in premiums.--If your employer offers no coverage at all, or a lousy health plan, you'll be able to get coverage on the new insurance exchanges, maybe with a subsidy from Uncle Sam.That's the good news.The bad news: You may also see your work hours cut.Employees with health coverage from big employers have already seen the biggest changes under Obamacare -- such as free preventive care, coverage of children to age 26 and the end of lifetime maximum limits on coverage.Next year brings an end to annual dollar limits on medical claims. An employee's annual out-of-pocket expenses for medical care will be limited to $6,350 per individual and $12,700 per family. But most employers' limits are already far below that, said Alan Loretta, partner at Mercer, the big employee benefits firm in St. Louis.There are new fees on employers and insurers, including $63 per year for each person an employer covers. Some of that will be passed on to workers. Premiums will also go up with the rising cost of medical claims, a trend that long preceded Obamacare.For workers at small firms, the change may be greater. The big shift will come with "community rating." That means that insurers will no longer be able to look at a workforce's health and medical claims when setting rates for groups of under 50 employees or for individuals."That's the crux of all issues for those with under 50 lives," said Paul Flotken, of the Caravus group of benefits consultants in downtown St. Louis.In theory, the change will be good for, say, a manufacturer with several employees with heart problems. It will be bad for a health club staffed with veggie-eating fitness buffs.Right now in Missouri, the least-risky employer pays 67 percent of the average rate for its industry class. A particularly sick group might pay 33 percent more than average.But Flotken suspects the ultimate result will be bad -- very bad -- for most of his firms' small business clients. One major carrier has given his firm rates so far. Applying those rates, the average Caravus client would see a 28 percent increase. That means "major, major disruption" in the small business health insurance market, he said.Gary Claxton, director of the Health Care Marketplace Project at the Kaiser Family Foundation, said he hasn't heard of similar sharp increases, although it's still early in the process. "It shouldn't be that big on average," he said.Employees will feel some of their boss's joy or pain, because they typically pay a percentage of the premium.TEMPORARY ESCAPEInsurers are offering select employers a temporary escape -- early renewal of their existing policy, Flotken said. Policies renewed this year can be carried over for another 12 months.The issue means little to big companies, who tend to pay medical costs themselves, using insurance companies mainly for administration.President Barack Obama issued a reprieve this summer for employers who offer no health coverage or bad plans. They now have until 2015 to decide if they'll offer minimally decent employee coverage or pay a $2,000 per-employee tax.That requirement covers employers with 50 or more "full-time equi迷你倉最平alent" workers. A full-timer is defined as someone working 30 hours a week or more. But businesses have to add part-timers' hours together to see if they meet the cap.The Small Business Administration gives this example of how the math works. "Company X has 40 full-time workers working 40 hours per week, along with 20 part-time workers working 15 hours per week. The 20 part-time employees are counted as 10 full-time employees. Company X has 50 full-time employees."Companies without coverage will pay the tax in 2015 based on the employee hour count in 2014. So employers anxious to slip under the limit will have to act next year. "We're seeing maneuvering to get under 50," Flotken said.The cost of coverage isn't necessarily overwhelming. An employer might pay $9 an hour to a hotel maid working full time. Insuring her would equal a $2.85 an hour raise. That's assuming a $250 monthly premium for minimum coverage. It also assumes the employer charges the maid the maximum share of the premium allowed under Obamacare.Employers who want to avoid that could cut the hours of part-timers. But there's a cost to that as well. An employer might lose his best workers, who need more work. Finding and training new employees costs money.Lots of companies close to the limit will hesitate to go over it. Doug Simms, vice president at the Meyer Group of benefits consultants, has a maid service as a client. The company was thinking of expanding into a new area, but that would put them over the 50-worker limit. "They decided they're not going to," Simms said.Of course, that strategy can be self-defeating in the long run. It limits the company's growth -- and ultimately the owner's profit.Lots of low-wage companies -- chain stores, restaurant chains, janitorial services -- are far over the limit. Will they offer Obamacare coverage -- or opt to pay the fine and send their workers to the exchanges?There's a good argument for covering the workers, said Loretta, the partner at Mercer. In plenty of cases, offering the minimum policy under Obamacare will be cheaper than the $2,000 per employee fine.Taxes are the reason. The fine isn't tax-deductible, but employee health coverage is. So, at a 35 percent corporate tax rate, providing coverage is cheaper at costs up to about $3,000. An employee can be made to pay a chunk of the premium -- up to 9.5 percent of the worker's household income -- and still comply with Obamacare.The lowest plan acceptable under Obamacare isn't generous. It has to cover only 60 percent of expected medical expenses, allowing for fat co-pays and deductibles on the worker. Such a plan may actually cost the employer less than $3,000 a year per worker, notes Loretta. And if an employee rejects coverage, the employer pays nothing."We don't think it makes sense for an employer to drop coverage," Loretta said. "You could set up a program and have it cost less, on a tax-advantaged basis, than paying the penalty."That 60 percent coverage level compares to 80 to 85 percent in the more typical company health plan.Obviously, employers don't know their workers' household income, so they can't calculate the 9.5 percent maximum employee contribution. However, the law provides a safe harbor of $90 to $95. So, many employers are offering a minimum plan that workers can get for $90 to $95 per month.Copyright: ___ (c)2013 the St. Louis Post-Dispatch Visit the St. Louis Post-Dispatch at .stltoday.com Distributed by MCT Information Services儲存