Some welcome delay in health insurance mandate; others upset

News-DemocratJuly 3, 2013 

Reaction to delaying federally mandated health insurance for employees varied from relief to criticism.

The Obama administration has announced that it will not require employers to provide health insurance by 2014 and will instead push back the deadline until 2015. Under the health law, companies with 50 or more workers must provide affordable coverage to their full-time employees or risk a series of escalating tax penalties if just one worker ends up getting government-subsidized insurance.

Before the deadline delay was announced on Tuesday, attorney Tom Mug had received a lot calls from clients seeking advice about the cost of complying with the new health care law, which is often dubbed "Obamacare." Mug, a lawyer from Greensfelder, Hemker & Gale PC in St. Louis, said he did not see this news coming and employers facing employee health care expenses have more time to prepare for the new policy.

"I was surprised by it," Mug said. "For large employers who are subject to it, it is welcome relief. I think employers up to this point have not focused enough on it and I sensed there was a lot more panic. Now this gives them some time to deal with it. Most have started the thought process, but now they can now do a much better job on a more deliberate and thoughtful basis and really take their time to do their analysis."

Republican lawmakers, like U.S. Rep. Rodney Davis, R-Taylorville, said the delay validates Republicans' belief that the law is unworkable and should be repealed. Davis represents parts of Madison County, including areas of Edwardsville and Collinsville.

"While the White House's announcement is certainly welcome news, it just proves what we've known all along, Obamacare is bad for small businesses, that create two out of every three new jobs in America, and bad for the hard-working taxpayers of central and southwest Illinois," Davis said in a released statement. "The full implementation of Obamacare is going to stop an already slow economic recovery, cost American families jobs and force individuals to pay even higher premiums. Now that the White House has taken this important step, they should continue by delaying the implementation of the rest of the law to allow us to have a true, open debate on the future of health care in America."

Some liberals are concerned by the delay. Richard Kirsch, a senior fellow with the Roosevelt Institute in New York, a think tank dedicated to promoting progressive policies, told the Associated Press that the delayed deadline comes at the expense of the uninsured.

"If the administration is going to give employers a break, it should not do that at the expense of millions of uninsured or underinsured workers who have been looking to have health insurance available to them on Jan. 1, 2014," Kirsch said.

Now, beginning Jan. 1, 2015, businesses with 50 or more full-time equivalent employees must provide affordable health care insurance for full-time employees or face a penalty. But Mug said the law, which was meant to provide health insurance for uninsured Americans, is complex.

According to the Greensfelder Attorneys at Law, determining the number of full-time equivalent employees is the first math problem. This is calculated by adding the number of full-time employees to the average monthly part-time employee hours in the previous year and dividing by 120. The calculation is done on a monthly basis and the months are averaged.

The St. Louis law firm calculates that an employer with an average of 2,400 hours of part-time work a month in 2012 would have 20 full-time equivalent employees. If they also have 30 full-time employees, they have 50 full-time equivalent workers, and must provide affordable health insurance for full-time employees or face a penalty.

But because they only have to provide insurance to full-time, not full-time equivalent, the calculation of the penalty is critical to decision making. It amounts to the number of full-time employees minus 30 and multiplied by $2,000. That means:

*A business with 30 full-time employees will owe nothing (30 - 30 = 0 x $2000 =$0.00)

*A business with 40 full-time employees will owe $20,000 (40 - 30 =10 x $2,000 = $20,000)

*A business with 100 full-time employees will owe $140,000 (100 - 30 = 70 x $2,000 = $140,000)

Greater Belleville Chamber of Commerce Executive Director John Lengerman said he is not yet sure how this may affect metro-east businesses. The chamber has scheduled a health care forum on July 18 to discuss the new health insurance laws.

"That is surprising news," Lengerman said. "I'm trying to get my arms around it and see how it impacts our members."

Brent Pieper, a benefit consultant with Yaekel & Associates Insurance Services Inc. in Belleville, said the health plans implementation continues to remain confusing at best for even the most knowledgeable.

He also said that employers must decide between "play or pay" -- affording mandated levels of health insurance or pay the penalties and allow employees to manage their own medical insurance. He also said the new health care policy's taxes on both group and individual health insurance plans have not been suspended and those taxes will continue to add at least 8 percent to 10 percent to everyone's premiums on top of the medical care inflation.

"All citizens, not just employees, are still required to secure insurance by Jan. 1, 2014, or face an IRS penalty," Pieper said in a released statement. "The pre-existing condition exclusion still remains and all other provisions remain in place. However, an unintended consequence of the delay may be the ability of some individuals to receive subsidies which are based on their employer's affordable or unaffordable health plan designation."

Mug said it will be interesting to see how the year-long health care law deadline extension plays out over the next few days.

"Whatever the motives are, it will be a break for employers," he said. "It will help in the implementation and it will help make it a lot smoother for everybody, including folks who have to enforce and administer it."

Contact reporter Will Buss at wbuss@bnd.com or 239-2526.

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