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Something you should know about the National Healthcare Bill that is due to take effect in 2014 – even if you do everything right, you can still get hit with a fine!

To explain this is layman’s terms we need to start off with a couple of definitions:

Exchange:  is a set of state regulated and standardized health care plans, from which individuals may purchase health insurance.

Full Time Employee:  30 or more hours worked during the week

Full Time Equivalent (FTE):  a calculation where you add up all the employees who  work 30 hours or more per week, and then give partial credit to those employees who work less than 30 hours per week.

For example, let’s look at a company that has 70 actual people working for it:

35 Employees work 30 hours or more per week = 35 Employees

20 Employees work 20 hours per week = 13.33 Employees ((20 x 20) / 30)

10 Employees work 15 hours per week = 5 Employees ((10 x15) / 30)

5 Employees work 10 hours per week = 1.66 Employees ((5×10) / 30)

FTE count is 55 Employees

Household Income:  Total taxable Income recorded per household (not per individual)

What you should know:

Point 1:

In 2014, if you have 50 or more employees you are obligated to offer them Group Health Coverage or potentially face a fine.  If you decide not to, and 1 employee enters the Exchange to get health coverage, you not only get hit with a $2,000 fine for that employee, you are hit with a fine for ALL your calculated FTE employees.  However, the legislation exempts the first 30 employees from the fine calculation (i.e., if the employer has 55 FTE employees as in the example above, the employer pays the fine for 25 employees).

In our example above, for that one employee going to the Exchange, the employer would be hit with a fine of $50,000 (Total Employees 55 – 30 exempt = 25 x $2,000) for that year alone.  This is a steep penalty, but if you weigh it against the potential cost of health insurance, it may be worth paying the fine.

Point 2:

In 2014, if an employer offers Group Health Coverage, it must be deemed Affordable.  If an employee’s contribution to an employer-sponsored health plan is greater than 9.5% of that employee’s HOUSEHOLD income, it is deemed Unaffordable.    If this employee applies to and is accepted by the Exchange, the employer will be fined $3,000 for that employee, and any other employee that enters the Exchange under similar circumstances.

There are numerous issues with this setup, but two of the most obvious are:

1. As an employer, you are not allowed to ask an employee what their household income is.
2. By 2014, non-discriminiation laws will be in effect, so you must treat ALL employees the same in regards to contributions.  This is either done as a percentage of the premium or flat dollar amount; you are unable to do it as a percentage of income.   For example, the employer contributes $300 per month towards the premium or the employer contributes 75% of the cost of the premium on a monthly basis.

What this means for you as an employer?

• Some employers may decide to take the penalty for not offering coverage since in our example a $50,000 fine is still far less than health insurance premiums for 55 FTEs annually.  This will result in even more uninsured just due to cost.

•  Even if you do your homework, know that there are elements to this law that may put you out of compliance.

What brokers are trying to do?

We are working with our lobbying group, National Association of Health Underwriters (NAHU,www.nahu.org) to have this changed so that employers are allowed to create a Safe Harbor, if you have looked at the lowest wage employee’s contribution when you set up your contributions.  Also, we are advocating for a “Last Look” by employers so they can correct this immediately to go into compliance.

What you can do?

Call your Congressman.    Let them know you have some concerns and that some of these fines would be detrimental to your company.

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