Little Fuss As Businesses Comply With New Mandate
"We got it all together, and we moved on," said Jim Fris, chief operating officer of
The mandate, requiring employers with the equivalent of 100 or more full-time workers to offer health insurance or pay a fine, took affect Thursday. It extends to employers with 50 or more workers in 2016.
Initially, the complexity of President
"The right guidance helped a lot," he said. "To sit in the meetings with experts on the other side of the table, it was a relief."
The employer mandate was one of the most controversial aspects of the 2010 law. Intended to discourage employers from dropping insurance after the government began providing subsidies to help low- and moderate-income Americans afford coverage, the mandate drew fire from opponents who said it would discourage business growth.
Nationwide, some businesses have reduced hours for part-time workers to less than 30 a week to avoid meeting the new legal threshold for full time -- and having to offer health insurance.
Public employers, too, have responded to the pressure. In June, the
And yet, the furor over the mandate seemed to fade as implementation grew nearer.
"We haven't heard a lot," said
The impact turned out to be less than feared since most businesses with 100 or more full-time employees already offered health insurance, he surmised.
"They don't see it as a challenge," he said.
"Not as many took it as we thought would," he said, which reduced the company's financial burden.
Under Obamacare, employers that do not provide insurance are supposed to pay a fine of
Employers may be subject to even bigger fines -- about
The bigger fines, however, could be rare, according to
The law defines underfunded insurance as costing more than 9.56 percent of employee wages and covering less than 60 percent of the plan's actuarial value.
"Your average, typical Joe isn't going to know," Linn said.
Pinch on small companies
While the mandate applies to bigger employers, ironically, small employers -- those with fewer than 50 full-time employees -- are experiencing some of the biggest changes under the law in the new year. Though they are exempt from the mandate, they must contend with fundamental changes to the way their insurance rates are calculated.
Traditionally, insurance carriers have been able to tailor rates by assessing a range of risk factors, including a business' claim history, industry and demographics, such as the gender and family status of employees.
As of this year, however, such considerations are forbidden when determining rates for small businesses -- as they will be in 2016 for medium-size businesses of 50 to 99 full-time employees. Instead, carriers consider a much smaller set of risk factors: essentially, where a business is located, the age of its employees and whether they smoke.
"When you do that, you are blinded to what the true cost will be," said
The change is meant to spread risk more evenly across the insurance pool. The result is lower insurance rates for some businesses and higher rates for others.
The construction industry, for example, has been hit particularly hard, Linn explained: Though the industry is filled with young men with "superman complexes" who seldom go to the doctor, contractors will have to pay virtually the same rates as other kinds of businesses, such as retailers, whose employees are more likely to avail themselves of medical services.
Unfortunately, more small businesses seem to be seeing their rates go up instead of down, said Linn, who mentioned a local excavating company that saw its insurance bill jump 53 percent. The company ended up canceling its coverage and giving its employees a stipend to shop for individual coverage at healthcare.gov., the Affordable Care Act website.
"Seventy-five percent of renewals have been horrible," he said.
Hoping to avoid such a fate,
"Nobody liked the imposition" of reevaluating, said
But in the end, the exercise proved useful. DME decided to replace its existing insurance plan with a higher deductible plan that included health savings accounts. The firm is contributing enough money --
"We saved like 30 percent on our costs, and that included funding the [health savings accounts]," Zeiner said.
So far, employees seem satisfied, she added: "I've had no negative feedback."
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