How Will Obamacare Affect You, Your Business, and Your Clients?

It’s time for West Michigan employers to stop sitting on the Obamacare fence and to start counting heads and keeping track of employee hours.

That’s some of the advice that attorney Mindi M. Johnson gave to a crowd gathered on April 18, 2013, at the Van Andel Institute for a presentation titled “How will Obamacare affect you, your business and your clients,” sponsored by Amicus Management Inc. and the Grand Rapids office of Foster Swift Collins & Smith PC. Johnson is one of Foster Swift’s experts who give presentations throughout the state on the law technically known as the Patient Protection and Affordable Care Act (PPACA) of 2010.

Now that the 2012 U.S. presidential election and court challenges regarding PPACAhave been decided, a number of area employers have started analyzing how the new federal law will affect their operations starting next year, Johnson said.

One of the first items on their agendas has been to determine if they will be considered large employers under the law’s definitions and how many full-time employees and “full-time equivalents” they have on average working for them. Defined as having at least 50 full-time employees or a combination of full-time and part-time workers that aggregate to 50 “full-time equivalents” in the preceding calendar year, large employers fall under a federal mandate to offer their full-time employees affordable insurance packages that cover a minimum value. The federal government is set to impose penalties on large employers that don’t offer packages that meet those guidelines.

Some of the new definitions of large and small employers and full-time workers may come as a surprise to companies. Under the law, full-time employees are those defined as working on average at least 30 hours per week or 130 hours a month. The number of full-time equivalents working for a company is calculated by adding the hours of all part-time employees and dividing the total by 120. An employer adds the results of full-time employees and full-time equivalents together each month, then calculates the monthly average over a year’s time to determine if it meets the large employer 50 employee threshold.

It’s important for employers to start this fundamental work now so that they have added flexibility to respond to the law when it becomes effective on January 1, 2014, for many companies, she said.

Some of her firm’s clients already have started or are preparing to start measurement periods “to either get ready for offering coverage as a larger employer or try to decrease those numbers so that they won’t be subject to the large employer mandate,” she said. This year presents a special case that can work to the favor of clients going into 2014, Johnson said. Rather than use a full year’s worth of monthly averages, companies that adopt a standard measurement period of at least 6 months, which begins by July 1, 2013, can lock in the full or part-time status of their employees for a 12 month stability period in 2014. The option to use this planning strategy effectively evaporates on July 1.

While the new regulations are being updated on a weekly basis, federal officials have defined enough portions of PPACA so that employers can decide whether to “pay or play,” she said. As a result, companies should start the sometimes tortuous calculations involving the costs of health benefit plans versus the penalties they may have to pay for not offering any health coverage or providing plans that don’t meet federal criteria. It’s very likely that the health care plans being offered by employers now will pass the federal definition of minimum value, as one study just indicated that 98 percent of all current health plans meet this requirement, Johnson said. Thus, the scrutiny will be on whether the offered plans are affordable.

The penalty for the large employers who offer no health insurance coverage to their full-time employees is $2,000 per year for each full-time employee they have, minus the first 30 full-time employees. The penalty is triggered if one employee obtains a tax credit or government subsidy to assist them in purchasing insurance through a health insurance exchange. There are also penalties if a large employer offers health care coverage, but such coverage is not affordable or of minimum value. Employers are not obligated to offer health plans to part-time employees — even though the hours for part-time employees are used to calculate the full-time equivalents number.

Since the law weighs in at more than 3,200 pages covering a number of situations, Johnson encouraged employers in the audience to consult with legal counsel, accountants, third-party administrators, and insurance agents to determine the best course of action.

The talk was co-sponsored by Amicus Management, a Grand Rapids-based workout firm that has administered more than 700 court-appointed receiverships since its inception, and Foster Swift Collins & Smith, a leading Michigan law firm with offices in Grand Rapids, Detroit, Farmington Hills, Lansing, Holland, and Marquette. Anthony Thompson, director of development for Van Andel Education Institute, presented an overview and video of the institute’s mission, and Daniel Yeomans, president of Amicus Management, gave opening remarks on the institute and health care prior to Johnson’s talk.

Mindi Johnson is an attorney at Foster Swift Collins & Smith who can be contacted at https://www.fosterswift.com/professionals-Mindi-Johnson-Attorney.html

For more information about this article, please write Matthew Gryczan at SciTech Communications LLC at mgryczan@scitechcommunications.net or website www.scitechcommunications.net

Photos provided by Jeff Dykehouse Photography, dykehouse@aol.com