SYRACUSE — The national health-care reform law, which was signed into law more than three years ago, finally becomes real for most people and businesses with this fall’s open-enrollment period for 2014 health-insurance coverage. That’s because the mandate that individuals buy health insurance, or pay a penalty, goes into effect Jan. 1, 2014. Also going […]
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SYRACUSE — The national health-care reform law, which was signed into law more than three years ago, finally becomes real for most people and businesses with this fall’s open-enrollment period for 2014 health-insurance coverage.
That’s because the mandate that individuals buy health insurance, or pay a penalty, goes into effect Jan. 1, 2014. Also going into effect on that date are the penalties for employers with 50 or more full-time equivalent employees who do not provide affordable health-insurance coverage that meets the government’s requirements if any of the employees get government subsidies.
As this seminal date approaches, many business owners are still unsure and concerned about how the health law affects them and what they should so. Still others are taking definitive action to reduce their potential costs under the law’s provisions, according to Renée Guariglia, a partner and executive VP of employee benefits at Falcone Associates, Inc., a Syracuse–based insurance agency specializing in employee benefits for businesses, including self-employed individuals.
As guest speaker at an April 18 meeting of the Estate Planning Council of Central New York, Guariglia detailed the key provisions of the health-care reform law, when they went or go into effect, and how they impact businesses and individuals. She updated the audience on the status of the state health-insurance exchanges and other key parts of the law being implemented in New York and nationally. About 30 people attended the event, held at the Crowne Plaza hotel in Syracuse.
Guariglia says that the top question that small businesses with under 50 employees are asking is: “Do I have to offer health insurance?”
She says her answer is: “If you’re under 50 employees, a small employer, sit back; you have nothing to worry about.”
But for small businesses that already do offer health-insurance benefits, Guaraglia says her firm advises clients to mull how such benefits help them recruit and retain employees before deciding to drop the coverage. Also, those employers with 25 or fewer workers and an average wage of up to $50,000 may be eligible for a health-insurance tax credit, according to the website of the Henry J. Kaiser Family Foundation.
For businesses with 50 or more employees, the questions and calculations can be more complex. Specifically, these employers are asking questions about the penalties they may face if offering “unaffordable” health insurance that results in one or more employees having to pay more than 9.5 percent of family income for the employer coverage, Guariglia says. If those employees then choose to buy health coverage in a government exchange and receive a tax credit, the employer would have to pay a penalty for not offering “affordable coverage.” The penalty is $3,000 annually for each full-time employee receiving a tax credit, up to a maximum of $2,000 times the number of full-time employees minus 30 employees, according to the Kaiser Foundation website.
“If no full-time employee receives tax credits for health-exchange coverage, there is no penalty,” notes Guariglia, who currently serves as secretary of the New York State Association of Health Underwriters and is an active member in the Greater Central New York Association of Health Underwriters, for which she served as president in the past. “The only time a penalty applies is if the employee receives a subsidy.”
Employers that are approaching 50 full-time employees are or just above it are facing some tough decisions and some are taking decisive action.
“We are already seeing a shift” with some employers choosing to hire two employees at say 20 hours each instead of 40 hours so they won’t hit the 50 full-time employee threshold, says Guariglia.
Indeed, there have been numerous media reports about retail and restaurant businesses, including the Papa John’s pizza chain, considering cutting employees’ hours to keep under the 30-hour mark at which point an employee is defined as working full time.
Other employers are choosing not to hire any more new employees if they’re bumping up against the 50-worker count.
The Estate Planning Council of Central New York describes itself as a not-for-profit organization established in 1935 that encourages an interdisciplinary approach to estate planning for local professionals through continuing education, collaboration, and council meetings and projects. Estate Planning Council members include attorneys, financial planners, insurance agents, accountants, and bank trust officers.
Contact Rombel at arombel@cnybj.com