Tom’s Opinion: Obamacare – The Hits Just Keep On Comin’!
Even though it’s only March, and Obamacare won’t take full effect for another nine months or so, now is the time to think and prepare for the turbulence ahead. Operating in the real world, and operating within a government program, are vastly different. So here are some changes and regulations you are going to have to abide by to keep your sanity and your business doors open.
Covering Employees Under IRS Rules
You may have heard that if you have 50 full time employees or less you don’t have to provide coverage. I’m not sure you are aware that your definition of full time, and the IRS definition, might differ. Here’s how the IRS determines full time employees.
You add the number of monthly hours worked by all part time or seasonal employees and divide that number by 120. Next add the total number of hours worked under the IRS definition of 130 monthly hours and you’ll have the number of full time employees. For example: (1,000 part-time or seasonal monthly hrs. divided by 120 = 8.33 Full Time Workers) (5,500 full time hours divided by 130 = 42.31 Full time workers) Congratulations—according to the IRS definition you have over 50 full time employees and now must provide healthcare to not only them but their dependents or pay a fine or penalty. Those pesky part-timers do add up.
At this writing 27 states have opted to let the Federal Government run and manage their exchanges. Federal exchanges will be limited to businesses with 50 employees or more. State run exchanges could increase that to 100 employees being eligible. Federal exchanges will require a 70% participation and will impose a 3.5% fee for plan participation. Not exactly free healthcare.
Exchange Plans Coverage
Obamacare requires the government definition of “essential health benefits.” The list of what’s not covered would be a shorter list. All exchange plans will have to include things like ambulance, emergency room, hospitalization, maternity care, mental health and substance abuse, prescription drugs, rehabilitation, lab work, preventative medicine and chronic disease care, pediatric, oral and vision care. Does your current healthcare plan cover all those things?
Costs Going Up
If you find yourself under the 50-employee threshold but still want to offer coverage to your best employees you are probably going to see some higher costs to accomplish that. Why? — Because of the Obamacare “essential health benefits” part of the overall plan. In the past you might have opted out of vision or dental. Not anymore. Whichever plan you choose will probably be more costly than what you’ve offered in the past. So it will be either tougher to compete with bigger companies or you will run the risk of your good employees going elsewhere to full coverage. Either way most of us are going to be paying more for goods and services in the months and years ahead to cover this plan.
Some Final Thoughts
People often point to other industrialized countries that have socialized medicine and successful healthcare programs as something the US should be doing. None of these countries have anywhere close to our population, diverse cultures or legal system. All of which make the comparisons unfair. No one is denying that affordable healthcare is a need in every country. But, in the case of the United States, if past history is any indication, Obamacare will prove to be unaffordable in the future. It will be a drain on state budgets as the exchanges become more and more expensive to administer and maintain. Be careful what you wish for might be some words we will regret in the future.