Presenter tells physician employers to expect ACA to impact insurance costs

The mandate requires full-time employees be provided health care, an area of which physician employers need to be aware.

The Affordable Care Act or ACA will have new insurance mandates for employers that go into effect in either 2015 or 2016 depending on how many full-time employees are employed at the business, and there may be penalties for businesses that fail to reach the insurance requirements, according to a presenter here.

During a health care policy session at the International Spine Intervention Society Annual Meeting, David L. Barron, JD, of Cozen O’Connor PC, in Houston, outlined for attendees the new health care requirements for all U.S. businesses that employ 50 or more full-time employees, or that employ the equivalent of 50 or more full-time employees.

For companies that employ 50 to 99 full-time employees, affordable health insurance must be provided for all full-time employees by 2016, according to Barron.

“You cannot get around the law by having an army of part-time employees,” he said, noting that for companies that have 100 or more full-time employees, affordable health insurance must be provided for all full-time employees by 2015.

A government mandate

A full-time employee, Barron said, is defined by the government as an employee that works 30 or more hours a week; 10 hours less than the traditional definition of 40 hours or more a week.

He warned against hiring more part-time employees to avoid or minimize insurance costs and discussed the example of a practice with 45 full-time employees and 20 part-time employees.

David L. Barron

Barron said, “You have to look at the part-time employees, aggregate the hours, and come up with the full time equivalent number,” he said. “In this case, the business does not have more than 50 full-time employees, but it would be required by the health care act to provide insurance because the part-time employees put the business over the limit.”

In addition, Barron said a business must offer “affordable” insurance to its employees, which is defined as a health insurance premium not exceeding 9.5% of the household income. He suggested employers should look at their employees’ W2 forms and make sure the health care costs are not more than 9.5% of their income.

Potential fines incurred

If companies do not reach these two requirements of type of employees and cost limits for health insurance premiums, they will be fined, Barron said. The government defines the fine as a “tax” that will be handled by the IRS. If a company does not offer insurance to their full-time employees, they will be taxed $2,000 for each full-time employee at their company.

However, according to Barron, the government’s “rule of 30” basically spots a business 30 full-time employees for whom they do not have to pay the fine. So, for instance, if a business has 100 full-time employees and does not offer insurance, they will have to pay a tax of $2,000 for each of the 70 full-time employees or $140,000.

Also, under the ACA employers will have to pay a tax of $3,000 for each full-time employee — if they purchase health insurance at an outside exchange — who is not offered an “affordable health care plan.”

Medical employers must look at the cost of insurance vs. the cost of the tax they must pay if they do not provide health insurance, Barron said.

“Moving forward, are you going to pay and provide health insurance or are you just going to pay? It may be easier for you to not do this and cheaper to just pay the penalties. Or do you want to make some adjustments?” Barron said.

It might be wise to take time now to look at who is full-time or part-time “and make some strategic adjustments there to manage your potential penalties coming down the road next year or the year after,” Barron said. – by Robert Linnehan

Reference:

Barron DL. Employment related aspects of the Affordable Care Act (ACA). Presented at: International Spine Intervention Society Annual Meeting; July 30-Aug. 3, 2014; Orlando, Fla.

For more information:

David L. Barron, JD, can be reached at LyondellBasell Tower 1221 McKinney St., Suite 2900, Houston, TX 77010; email: dbarron@cozen.com.

Disclosure: Barron has no relevant financial disclosures.