Effects Of Health Care Reform
Discussion has been swirling around for months about the recently signed health care reform bill and the impact it will have on employers. The impending changes mean growers, as employers, have a lot to think about in the coming months and years in order to comply with the new rules. And, with the seasonal nature of agriculture, it’s a business model that doesn’t necessarily fit neatly into the bill’s provisions.
Cathleen Enright, vice president, federal government affairs, Western Growers, has been following the issue from the start. She says Western Growers helped to bring growers’ voices to the debate on the hill. “Clearly, when the drafts were developed, the drafters weren’t thinking about agriculture, and certainly not specialty crop agriculture,” she says. “If you look at the bill and read it with regard to individual mandates and employer responsibilities and such, it’s really written for an office type of work environment.”
Enright and her colleagues worked to help members of Congress understand that a one-size-fits-all approach could not apply to agriculture. “Fast forward a year, and I would say we had modest success in landing those points,” she says. “There are a number of references in the bill to seasonal workers. There’s also a recognition and follow-on conversations we’ve had with United States Department of Health and Human Services (HHS) that agriculture doesn’t fit neatly into the law.”
Enright says one of the biggest employer responsibility provisions within the law is what some have referred to as “pay or play.” Effective January 1, 2014, if you’re an employer of more than 50 full-time employees, you will have to offer your employees health care coverage, or potentially pay a penalty if you don’t. A full-time employee is defined as someone who works at least 30 hours per week per month.
If you have more than 50 employees, don’t offer coverage, and one of your employees goes to a state-based exchange (these eventually will be set up to provide insurance) and gets a subsidy to buy insurance, the penalty will kick in. That means a $2,000 fine per year times every full-time employee you have. “Even if only one of your employees went, you pay the penalty, times every employee, minus the first 30,” Enright explains. In other words, if you have 100 full-time employees and you don’t offer care, and just one of your workers seeks a subsidy to buy insurance, you’re on the hook for $2,000 times 70 for that year.
But, offering health care doesn’t necessarily mean you’re in the clear, either. According to Enright, if the plan you offer is too expensive for the employee (an employee with a household income of up to 400% of the federal poverty line and either the employee’s premium is 9.8% of the household income or greater, or if you don’t pay enough of the premium), you could be subject to fines. If one employee seeks subsidized insurance from the exchange, the penalty in this case would be either $3,000 for each employee that receives the subsidy, or $2,000 for each full-time employee minus 30 — whichever is the lesser amount, Enright explains. “Congress’ intention is for the fine to be assessed monthly, but we don’t know how that’s going to happen yet,” she says.
Sorting Out Details
Employers have until 2014 to figure out what will make the most sense for their businesses, whether it be continuing to offer what they currently offer, or not providing a plan and instead possibly paying the penalties. “They’re going to have to see what works for their business model,” Enright says. If you currently are offering coverage, she recommends keeping in close contact with your plan provider. “The law is in its infancy, and there’s not full implementation guidance available yet — certainly not for the changes that are coming in 2014, but as they come, your provider should be able to talk with you about what the changes are with regard to premium costs and the scope of coverage that has to be offered,” Enright says.
Western Growers continues to work with HHS during the implementation process. “We are fully cognizant of the challenges that the health care law is going to cause for employers of seasonal workers, particularly in regards to agriculture, and we’re certainly continuing to argue the needs of specialty crop producers,” says Enright.