JERRY McBRIDE/Durango Herald
A little more than a year remains until most aspects of the Patient Protection and Affordable Care Act go into effect, but business owners and health professionals say a lot of unknowns remain about how the act will affect businesses – making it harder for them to prepare for the coming changes.
“I think the fear most businesses have is the fear of the unknown,” said Richard Betts, vice chairman of the board for the Colorado Health Benefit Exchange.
Here is what is known so far:
Businesses that employ more than 50 full-time employees – those working more than 30 hours a week – will be required to provide health insurance to employees or pay a $2,000 tax penalty per employee after 30 employees.
The waiting period for a new employee to get on the insurance plan cannot be longer than 90 days.
Some owners, particularly small-business owners, might opt to pay the tax penalty instead of offer insurance or cancel their current plan because of rising health-care costs.
A 2012 survey by consulting firm Mercer found that 22 percent of small-business owners reported they were likely to cancel their health plans in the next five years.
William Plested, a former president of the American Medical Association who now lives in Bayfield, thinks companies increasingly will look to reduce costs by cutting their workforce or paying the fine because that’s cheaper than offering health insurance.
Most businesses interviewed for this story said they are not cutting employees’ hours, but the city of Durango may be reducing the hours of some part-time employees to ensure they are below the 30-hour mark.
The city hasn’t determined how many employees’ hours will be reduced, City Manager Ron LeBlanc said.
“Until the act goes into effect, we won’t know the full impact it will have on us,” he said.
Chris Smith gained attention in October after he sent an email to his employees warning them their hours could be cut and they could lose their health care and jobs if Republican presidential candidate Mitt Romney lost the election.
“The Affordable Care Act, aka ‘Obama-Care’ ... will crush Visiting Angels and hurt your job when it takes effect,” the email said.
Smith said in an interview in November that he has not reached a decision about how the Pagosa Springs company will deal with the act once it goes into effect.
“I’m doing extensive research to protect employees’ benefits, salaries and everything,” he said. “I’m reading up on some of the things that larger employers are doing and looking at how best we can serve our (customers) and still treat our employees the best.”
The senior-care facility has 80 employees.
Wellness programs on the rise
In an effort to curb health-care costs, many employers now are offering wellness programs to employees to encourage fitness.
StoneAge Waterblasting Tools opened a fitness center in its building last month for employees.
“We are very hyper aware of wellness and preventive care, and anything we can do to keep our employees healthy and happy is a good thing,” said Betsy Fitzpatrick, human resources manager for StoneAge.
Mercy Regional Medical Center provides a program to promote health and wellness among its employees by offering health assessments, education about nutrition and a wellness coordinator to create exercises for the employees, said spokesman David Bruzzese. The program also is available to local businesses.
“Our ability to directly benefit local employers by helping them keep employees and dependents healthy can reduce medical claims and the cost of providing medical benefits,” said CEO Tom Gessel. “I think it’s an important service to offer.”
Few use health-care tax credit
The Women’s Resource Center provides insurance for its three employees and covers 100 percent of the premiums, Executive Director Liz Mora said. A health-care tax credit available through the Affordable Care Act helps the center cover the insurance costs.
Businesses with fewer than 25 employees that pay average annual wages below $50,000 per full-time employee and contribute at least 50 percent to each employee’s health premium can qualify for the tax credit. The maximum credit is 35 percent for small businesses and 25 percent for nonprofits, but the credit is expected to increase in 2014 to 50 percent for small businesses and 35 percent for nonprofits.
The Women’s Resource Center has received about $2,000 annually for the last two years through the tax credit, Mora said.
A 2012 U.S. Government Accountability Office survey found that only 170,300 small-business owners claimed the credit in 2010, even though up to 4 million were eligible. A Kaiser Permanente survey showed that 56 percent of Colorado business owners said they didn’t know about the credit.
Lon Erwin, executive director for Habitat for Humanity of La Plata County, said he didn’t know what the criteria was when asked if the nonprofit had applied for the tax credit.
Habitat for Humanity provides defined-contribution health insurance, a plan where the employer gives each employee a fixed amount that the employees then choose how to spend, whether that be paying for deductibles, prescriptions or other health-care costs.
These plans are becoming more popular. Mercer also found that 45 percent of the employers surveyed either have considered or are considering defined-contribution health insurance.
Employers could see employees rejecting the company insurance plan in lieu of shopping on the health exchanges. But that could mean higher health-care costs for those who remain on the company insurance and additional money from the company itself.
“It may work out that for the employee it’s cheaper to drop out of the college’s insurance and instead get their insurance through the exchanges,” Fort Lewis College spokesman Mitch Davis said. “It’s better if the college can keep more people under our insurance because we spread the costs of insurance around to all of those who are covered.”
If a large group of employees leaves the company insurance plan, fewer people remain to spread the costs, and the costs rise for the remaining employees and employer, he said.
FLC currently provides insurance for its full-time employees, but it is still waiting to see how the act will affect some of its part-time and adjunct faculty, Davis said.
Open enrollment for the exchanges is expected to start Oct. 1, 2013, with coverage effective Jan. 1, 2014.