Issue link: http://read.dmtmag.com/i/107829
Health Care ("You Can't Run and You Can't Hide from Obamacare" continued from page 34) first time in history, people would be mandated to purchase a product from a private industry. And at the time, there were so many uncertainties in general that employers found it difficult to plan. These uncertainties included the fiscal crisis, tax issues, the housing crisis, federal infrastructure, and more. "However, rather than focus on health insurance reform in a way that would begin to provide some type of certainty, the president went the opposite direction, creating even more uncertainty," Klein added. Trickle-down Effect Since the passage of the Patient Protection and Affordable Care Act (PPACA), anticipation of adverse effects has been growing. A January 2012 Wells Fargo/ Gallup Small Business Index report noted that there were a number of reasons small businesses were not in the new employee hiring mode, ranging from "Don't need any additional employees at this time" (76 percent) to "Worried we may no longer be in business in 12 months" (24 percent). Another reason was, "Worried about the potential cost of health care" (48 percent). The report noted that, "Given this difficult operating environment, it is not surprising that many small business owners also worry about potential new health care costs and government regulations. While small businesses are always finding ways to deal with their changing operating environment, including government regulations and health care, those added challenges can be seen as exacerbating an already uncertain and difficult situation. In turn, they become additional reasons to hold back on hiring." On Aug. 8, 2012, Mercer (a global consultancy firm specializing in talent, health, retirement and investments) released results of its survey of more than 1,200 employers on the potential implications of Obamacare on their businesses – 60 percent expect some increase in cost, with one third of those expecting an increase of 5 percent or more. One reason is the requirement to provide coverage to a larger percentage of employees than many employers had provided for before. In the press release, Tracy Watts, a U.S. health care reform leader, says, "Extending coverage to more employees will be a significant new expense for these employers, especially because other provisions regulate how much an employer can require employees to contribute to the cost and how good the coverage must be." Just 6 percent of the respondents said it is likely they will drop their medical plans after the public insurance exchanges come on line. This rises to 9 percent among retail and hospitality employers. So what are the implications of Obamacare for AED members? Play or Pay The most important consideration is the "play or pay" option. This requires large employers, defined as having 50 or more full-time equivalent (FTE) employees, to provide adequate and subsidized group health insurance to all full-time employees and their families beginning in 2014. Failure to do so will subject the employer to a penalty of, in most cases, $2,000 a year per employee. As a result, some employers are considering just eliminating health insurance, because they have determined that the cost of providing health insurance will be greater than the cost of paying the penalty for not providing it. According to Kristin Kahle, senior vice president and compliance officer for Benefits Exchange Alliance, San Diego, Calif., several employers have said that to get around this requirement they plan to drop all of their employees to part-time status. "These employers don't understand that the number is not based on fulltime employees, but on a full-timeequivalent calculation," she stated. In 2013, employers will need to conduct a financial and renewal analysis to determine whether they are going to keep their medical plans, and whether they will be required to pay a fine in the future for overcharging on their employee contributions, according to Doug Truax, president of Veritas Risk Services, Oak Brook, Ill. "While employers may wait until the third quarter of 2013 to do this, it is advantageous to begin the process earlier to allow more time to review the options and plan accordingly," Truax said. There will be some employers who will decide not to keep group medical, and they will save some money as a result. "That is, we will probably see a number of smaller employers not keep their medical on Jan. 1, 2014," Truax added. "On the next round, Jan. 1, 2015, even more will probably drop." However, even though it may make financial sense for some employers to drop health insurance, they will have to determine what impact this decision will have on employment issues, such as recruiting and retention. As a result, after a year or two of not maintaining a medical plan and sending employees to the exchanges (more about these later), many of these employers may end up restarting their medical plans at some point in the future, due to potentially increased fines for not carrying a medical plan, and/ or because they are having difficulty retaining key employees and recruiting new ones. (If employers do drop their plans, their employees would have access to coverage on the public exchanges.) "Employers that do keep their plans will probably want to take a 36 | www.cedmag.com | Construction Equipment Distribution | February 2013 34_Obamacare_Feature_KP.indd 36 1/30/13 3:12 PM