How The Affordable Care Act Affects You And Your Employees
March 30, 2016 The Affordable Care Act (ACA) also known as “Obamacare,” has generated a lot of uncertainties for individuals and businesses alike regarding who falls under the mandate, what the requirements are for coverage, and what the penalties are for not having coverage.
As of 2014, the ACA required all U.S. citizens to carry health insurance. And in 2016, business owners with 50 full-time employees or more, also known as Applicable Large Employers (ALE), also have fallen under the jurisdiction of the law and are required to provide health insurance to at least 95% of their employees or be subject to a fine.
The regulation widely known as the “Pay or Play” mandate affects farm businesses with at least 50 full-time employees. According to the IRS, a full-time employee is defined as someone who works at least 30 hours a week or 130 hours per calendar month.
There are a lot of details to unpack regarding ACA, and it’s important to consult an expert to get all of the necessary information to acquire coverage for your operation. However, to narrow down some of the more vital aspects of ACA, what follows are a few of the most commonly asked questions and their answers to help better orientate you with the law.
What’s New?
According to Healthcare.gov, at its most basic level, the ACA changes rules and funding for health insurance while attempting to decrease the number of uninsured citizens.
The ACA also provides incentives for preventive and wellness programs, provides money to improve access to health care providers, but still allows users to seek insurance through the private marketplace.
“The biggest difference here is that it’s being mandated by the government to do this rather than self-select,” says Susan Taylor, Family Finance Specialist at the University of Iowa.
Taylor also notes that prices have gone up since the implementation of the ACA in 2014.
“From the time the plan rolled out, insurance rates have gotten more expensive, and that has to do with the providers,” she says. “It also depends on your age; the costs will be much higher if you are 50 years of age as opposed to 25.”
Furthermore, according to Iowa State Extension, prior to the ACA, it was typical for most farm families to have high deductible insurance plans, which discouraged regular medical checkups and preventive care, but many of the new ACA marketplace plans offer free preventive and wellness screenings for holders.
How Does the ACA Affect H-2A Workers?
According to the U.S. Department of Foreign Labor, between 50,000 and 100,000 agricultural workers come to the U.S. to work with H-2A visas each year.Whether or not the ACA applies to H-2A visa holders depends on several factors. The ACA applies to all resident aliens, and H-2A visa holders may be considered resident aliens if they are present in the U.S. for more than six months a year.
If H-2A visa holders are in fact resident aliens, they will be required to have “minimal essential” health insurance or be subject to tax penalties when they file their tax returns for 2015.
According to Healthcare.gov, these employees can seek out individual coverage in the marketplace, and as an agricultural employer, your obligation is to inform each of your employees’ written notice about their health insurance options available to them in the marketplace.
What Are The Exemptions?
As previously mentioned, the ACA requires employers that have more than 50 full-time employees to provide health insurance, but the final regulations indicate that some large employers of farmworkers might be exempt if their workforce is largely seasonal.
The loophole there, is that an employer that has more than 50 employees is not considered a large employer if those employees do not work more than 120 total days during the year. It’s under this circumstance they would not be required to provide health insurance.
Information on how to calculate whether or not you are an ALE is available online.
As for farmworkers, there are several exemptions that might apply to them as individuals, including an exemption for those who cannot afford health insurance (if coverage will cost more than 8% of their income), those who have experienced short coverage gaps of three months or less, and individuals who are not lawfully present in the U.S.
What Are The Penalties Of Non-Compliance?
According to Healthcare.gov, if an ALE does not provide health insurance to at least 95% of its employees, the company will be fined “a flat $2,000 per full-time employee (excluding first 30 employees).”
However, the website also mentions if only a few of your employees end up with either unaffordable coverage or coverage that doesn’t meet minimum value standards, the fine is $3,000 per full-time employee who received cost assistance.
For individuals who did not acquire coverage in 2016, the penalty is calculated either by income percentage or a flat fee. If calculated by income percentage, the individual will be charged 2.5% of their household income or a maximum of the total yearly premium of the lowest cost marketplace plan.
The flat fee for individuals is $695 for adults, $374.50 for a child under 18, and a maximum of $2,085.
Are There Tax Breaks Available?
Yes. Small businesses can use the Small Business Health Options Program (SHOP) to get lower costs on group plans and claim tax credits. According to the Obamacare website, small businesses with 100 or fewer employees can apply for SHOP coverage year-round.
Some options in the SHOP Marketplace provide a tax credit of up to 50% of the premium costs if you qualify, and coverage must be offered to all of your full-time employees.
For general information on the Affordable Care Act, visit Healthcare.gov.