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Counting to 50 — under Affordable Care Act
The first and most important determination small businesses must make before the Patient Protection and Affordable Care Act takes effect Jan. 1 sounds easy — but it isn’t. Do you have 50 or more full-time employees or full-time employee equivalents?
Marti Lolli, director of Health Care Reform at Priority Health, told a group of employers in Grand Rapids this morning that some business owners who think they qualify as a small employer — and thus are not required to provide employee health insurance under the PPACA — “may be a large employer.”
Another expert who spoke at the Alliance for Health First Friday Forum, Roger Edgren of McGraw Wentworth, said a presumably small business with a large number of part-time employees, or even a large seasonal work force, may have to limit the amount of hours they work each week, or provide insurance.
Lolli wrote a workbook for employers called “Remedial Math (or How to Count to 50),” which Priority Health makes available to any employer. She said the most important issue facing employers now is: “They have got to understand if they are a large employer.”
A couple of facts illustrate how complicated the determination is:
**A person who works an average of 30 or more hours a week is counted as full-time, under the PPACA.
**Part-time employee hours must be counted, too, and added to the calculation.
The count of hours must take place each month and actually is already underway this year, to determine Jan. 1 if an employer is required to provide employee insurance during 2014. Each year the calculation repeats.
One of the biggest concerns among employers, according to Edgren, is part-time employees who average more than 30 hours a week. He said there are reports that many restaurant chains, which employ mainly part-time workers, are cutting the hours each can work in a week.
One of his clients, said Edgren, has limited its part-timers to 27 hours per week.
As for those companies that clearly fall under the PPACA, additional costs are looming Jan. 1. Edgren said a general increase in health insurance rates next year has been pegged at 15 to 20 percent, and there are other costs, including taxes that will be charged by the government.
For one of his client companies, the anticipated increase in insurance costs due just to the PPACA is 6 percent.
Employers who have a large percentage of younger workers “could see a much higher increase” in their employee insurance cost, said Edgren.
There are also major decisions ahead for individuals who do not have access to employer-sponsored insurance. Some may opt to pay the government’s very low penalty — relative to the actual cost of health insurance — via their income tax.
“The American public has no idea what’s about to hit them in the next six months,” said Edgren. As for employers, “there’s a lot of confusion ahead.”
Lolli said there will be “winners and losers” under the ACA. Some employers may not experience a large increase in cost but will have to undergo a “recalibration” of their employee health care coverage.
Priority Health is putting out another health care reform guide in two weeks, according to Lolli, and it has links available to two webinars it held for the public recently and recorded; one for large employers and one for small.
“In just the small group (webinar), we had over 900 people on that call,” she said, including employers and insurance agents. And that was just the live webinar, she noted, with thousands more listening to the recorded version later.