By Jack Keough
If you’re the owner of an electrical distributorship, or even an employee of one, you might have thought the new health care law wouldn’t be fully into effect until next year. Well, that’s not quite true, as recent articles including one from the Wall Street Journal correctly point out.
The new health care law, formally known as the Patient Care and Affordable Health Care Act, was passed in 2010 and one of its most notable provisions takes effect Jan. 1, 2014 which mandates employers to offer health insurance if they have more than 50 employees.
Some employers, however, don’t realize that it is this year’s payroll that will determine whether they will be subject to penalties in 2014 if they don’t offer health insurance.
Here is why there is reason for confusion: In order to see if they would be subject to the mandate, employers have the choice to calculate their headcounts by averaging the full 12 months of 2013 or a consecutive six-month period during the year.
The federal government didn’t send out this type of information to employers until just a few weeks ago and many may have overlooked it during the Christmas-New Year’s holidays.
So it is critical for employers who may be on the cusp of 50 employees to make decisions now and not wait until 2014. By the way, a full-time employee is one who is employed (work and paid leave and vacation) an average of at least 30 hours a week, or 130 hours in a month.
If you have more than 50 employees and don’t offer health coverage to your employees or their children up to age 26, the penalty is $2,000 per year for each full-time employee in excess of 30 full-time employees. There are no penalties if part-time employees aren’t offered coverage.
Some employers, and no one knows just how many, say they will purposely keep their employee levels below 50 so they won’t be affected. This could hurt hiring by smaller companies.
A main provision in the law that creates insurance exchanges intended to make coverage more affordable and available to individuals and small businesses, takes full effect on Jan. 1, 2014.
Employers with up to 50 workers will be able to buy coverage for their employees under Small Business Health Options Program exchanges starting in 2014. These employers may be eligible for tax credits.
Open enrollment in these exchanges starts this October.
There is also confusion about the “exchanges” or what is often referred to as marketplaces. Some states may opt to operate an exchange themselves, in partnership with the federal government or to let the federal government operate it for them. Some states already have refused to set up exchanges and there is a question as to whether the federal government will be ready to set up these exchanges.
There have been a number of changes that are already in existence from the passage of the 2010 law. For example, lifetime coverage limits for certain health benefits have been removed. And that has caused more money to be paid by employers. Also, under the law beginning in 2014 no insurance plan will be able to deny coverage due to pre-existing conditions.
Starting in 2014 under the Affordable Care Act, most children without dental coverage will be picked up either through state or federal exchanges. Adults would not be covered.
Currently, 83% of U.S. employers with 50 or more employees already provide health insurance, according to Mercer, a benefits consulting firm.
Despite the passage of the law and its implementation, health care costs are expected to rise 5-7% this year.
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Jack Keough was the editor of Industrial Distribution magazine for more than 26 years. He often speaks at many industry events and seminars. He can be reached at john.keough@comcast.net or keoughbiz@gmail.com
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