Wednesday, April 25, 2018
Business

Obamacare to cost big companies money, time

As required under the health care reform law, Tampa Electric Co. mailed a letter to its 3,000 full-time employees telling them about new insurance marketplaces that could get them cheaper coverage.

Not a single employee responded.

It wasn't because they don't care about their health insurance. It was because they are satisfied with their current plan and don't think they could get a better deal through the online marketplaces, which opened Tuesday.

"When they look at our health care plan, the portion they are responsible for paying is so small compared to the total cost that it wouldn't make any sense," said Brad Register, TECO's director of compensation and benefits.

That's the reality for many large companies across the Tampa Bay area as the Affordable Care Act gradually rolls out. They expect implementing the law will be costly and time consuming but, in the end, will result in most employees sticking with the insurance they already have.

Under President Obama's health reform law, companies with more than 50 full-time employees must provide affordable health insurance or pay a fine, starting in 2015. To meet the standards, plans must pay an average of 60 percent of medical costs and insurance can't cost an employee (excluding spouse and dependents) more than 9.5 percent of their annual household income.

Employees are welcome to look into the marketplaces but won't be eligible for the federal subsidies if their company offers affordable, adequate coverage, which most large companies do. For example, a single employee paying $30 a week for insurance would have to earn less than about $300 weekly to qualify for assistance.

Perhaps more important to large employers is the uncertain cost of Obamacare, insurance experts said. Companies expect rates will go up to accommodate new coverage requirements. They also will have to pay a hefty annual fee for the next three years to help insurance exchanges cover large claims — $63 per plan enrollee in 2014, which for some companies could amount to hundreds of thousands of dollars. Also at issue is the staff time required to comply with the law and educate employees about it.

"There's a lot of misconception from individuals who don't make a lot of money that they are going to get a subsidized plan," said Justin Treece, a benefits advisor at Connelly, Carlisle, Fields & Nichols insurance company in Clearwater. "It will take a long time to work through that."

Human resource departments have been stretched thin for years and are often to the first to take a hit during tough economic times, he said. Adding a complicated law to their plate becomes a huge administrative burden.

Most big employers have calculated the cost of eliminating their insurance benefits and paying the penalties but found it didn't make sense financially or in terms of worker recruitment and retention, Treece said. After about 300 employees, it generally would become more costly to pay the fine.

The penalty for not offering coverage will be $2,000 per employee after the first 30. It will jump to $3,000 per employee for anyone who qualifies for a federal subsidy because the company doesn't offer adequate coverage. Businesses also would lose tax breaks if they drop their benefits.

Many businesses have said they are in a wait-and-see mode until they find out what plans are available and what they cost. It's possible some insurance carriers will no longer offer plans that don't meet the minimum standards.

Publix supermarkets has not set rates for its coming plan year but expects to see an increase in insurance costs because of the new law. The Lakeland-based chain plans to pass along a small portion of the increase to employees but will pay for most of it, said spokeswoman Brian West.

Publix said it will continue to hire employees based on business needs, not on the impact of health care costs. It offers health insurance coverage to employees who work at least 29 hours a week. The threshold for being considered a full-time employee under the Affordable Care Act is 30.

Media outlets have reported that some companies are moving to cut hours for part-time workers to keep them below the full-time mark. Orlando-based SeaWorld Entertainment, which owns Busch Gardens, said recently it reduced its cap on weekly hours for part-timers to 28 from 32. But the company also plans to add full-time hourly positions next year across its 11 parks.

Decreasing hours to avoid a full-time designation could open an employer to a lawsuit if done widely, said Treece, the benefits advisor. But he does foresee employers capping hours, especially for restaurant and service workers.

Although the penalties and some other elements of the law have been delayed, Treece recommends companies become well-versed in the rules. He expects the U.S. Department of Labor will be aggressive in conducting audits to ensure the program is properly funded. Many of his clients are concerned the costs of implementing the law could result in higher prices for their goods and services.

"It's narrow-minded to think this isn't going to have some kind of impact," he said.

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Published: 04/25/18