Start getting ready now for health care reform

UPDATE: 7/3/2013


The Obama administration unexpectedly announced Tuesday evening that it is delaying the employer mandate under the Affordable Care Act until 2015, forcing FFVA to postpone its series of meetings July 8-11 on the topic. The Treasury Department is expected to release formal guidance soon.

FFVA will reschedule the meetings for the fall, so watch for details then. We apologize for any inconvenience.

In the meantime, note that this announced delay only applies to the employer mandate ($2,000/$3,000 penalty) for 2014. At this time, FFVA is unaware of any additional delays in the other provisions in the Affordable Care Act. The team at J. Rolfe Davis Insurance, which will be giving a presentation at the FFVA meetings, recommends that you proceed in planning for the implementation for Jan. 1, 2014, with regard to the other mandates under the Act. For example (not a comprehensive list): 90-Day Waiting Period, Exchange Notice, W-2 Reporting, Pre-Existing Conditions Exclusions, Women’s Preventive Services, PCORI Fees, Reinsurance Fees and more.

The announcement means that businesses with 50 or more full-time employees will not be required to provide health care insurance until 2015, rather than 2014, which was the former deadline.

In a statement, the Treasury Department said, “This is designed to meet two goals. First, it will allow us to consider ways to simplify the new reporting requirements consistent with the law. Second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees.”

Agricultural employers need to prepare now for the implementation of the behemoth known as the Patient Protection and Affordable Health Care Act. Passed in 2010 and continually expanding with more regulations crowding into the plan, it’s fast becoming reality.

The following steps are recommended by Sheldon Blumling, partner at the law firm of Fisher & Phillips. Blumling guided FFVA members and others through the process at a recent FFVA-hosted webinar, “Health Care and the Law: Preparing Agriculture for 2014. View the webinar presentation here.

Employers can learn more by joining FFVA at one of a series of district meetings across the state that will cover the details of compliance with the new law and how it will affect their operations and workforce. [See box at end of article for details]

Determine how employer ‘play or pay’ mandate applies

Agricultural employers should first determine if they must “pay or play.”  The employer play or pay mandate applies to operations with 50 or more full-time employees or full-time equivalents. An employer with the magic number of 50 must offer minimum essential health coverage to those employees and their families or else pay a fine.

How do you determine that number if you have part-time and seasonal employees? First, remember that full-time means 30 hours a week or 130 or more hours per month. To determine how many equivalents you have, divide the total number of hours worked by the pool of part-time, seasonal or variable-hour employees in a month by 120.

The seasonal worker exemption applies only in determining whether you meet the 50-employee threshold. If you have 49 full-time or full-time equivalent workers, you do not have to provide health care coverage to them, nor do you have to provide health care coverage to any seasonal employees. If you employ 51 full-time equivalents, you must pay for coverage for those workers and any seasonal employees.

The “pay or play” mandate says that a seasonal worker is one who works for an employer for 120 or fewer days in a year.

The IRS defines the term “seasonal worker” as: “Labor is performed on a seasonal basis where, ordinarily, the employment pertains to or is of the kind exclusively performed at certain seasons or periods of the year, and which, from its nature, may not be continuous or carried on throughout the year. A worker who moves from one seasonal activity to another, while employed in agriculture or performing agricultural labor, is employed on a seasonal basis even though he (or she) may continue to be employed during a major portion of the year.”

The truth is, according to Blumling, the concept of seasonal workers is only useful for purposes of the “50 or More” test, and the seasonal worker exemption will not help many large growers or growers with year-around operations.

The phrase “play or pay” means that in order to “play” and avoid the possibility of “paying” penalty taxes, an employer must offer (key words here) adequate and affordable group health plan coverage to all full-time employees and their dependents.

Adequate means that the plan covers at least 60 percent of the cost of benefits. An adequate plan goes by the term “minimum value.” If your plan qualifies, you are in one of three “safe harbors,” meaning that you’re on the right track and won’t have to pay a penalty.

Affordability is the second safe harbor. Affordable means that the cost of employee premiums does not exceed 9.5 percent of his or her household income.  And yes, there’s a formula for that.

The third safe harbor is counting variable-hour employees. If you have non-variable hour full-time employees, you offer coverage within 90 days of employment.  Variable-hour/seasonal employees are handled by using new “look-back” safe harbors. That’s called “look-back and stability period concepts.”

And things do get a bit ponderous at this point. Determining when and if offering coverage is necessary to a given employee depends on the outcome of a different set of calculations based on whether the employee is newly hired or not.  Rehires require yet another set of calculations. It’s best to consult a tax expert to determine your obligations.

The “pay” part of “play or pay” kicks in if an employer does not offer adequate or affordable coverage and at least one full-time employee receives federal premium assistance for purchasing coverage through one of the newly established insurance exchanges. If that happens, the employer will pay an annual penalty tax.

Many employers may choose to “pay” rather than “play” since the penalty could be cheaper than health care coverage.  The penalty is equal to the lesser of $3,000 per full-time employee receiving assistance or $2,000 per full-time employee, excluding the first 30 full-time employees.

As a note, an employee may qualify for federal assistance if his or her income is less than 400 percent of the federal poverty level.

Model the impact of play or pay Mandate

So, will you pay or play? Blumling lists some planning considerations. First, the penalty applies to all full-time employees, whereas coverage subsidies apply only to those employees who actually buy coverage from an exchange. In addition, the penalty is non-deductible, whereas coverage premiums are deductible.  And the “play” vs. “pay” choice will differ for each employee based on when he or she was hired.

Designate look-back and stability period concepts

To determine whether you will pay or play, you will need to designate someone with the proper skill set to keep records of ongoing and new employees’ hours worked during a certain period of time. There are formulas for that and penalties to pay if not strictly followed. Those figures will allow you to legally determine full-time status of your workforce.

Follow further developments in the law

Automatic enrollment could eventually apply to large employers of more than 200 full-time employees, but indications are that it will not be implemented until sometime after 2014. Non-discrimination requirements for insured plans are something to keep an eye on, but implementation is delayed for now.

Learn more about how implementation of the Affordable Health Care Act will affect your individual operation by attending one of FFVA’s upcoming workshops to be held across the state.

FFVA district meetings offer important information for employers


FFVA is offering meetings in seven locations. Click on the appropriate meeting link below to register online. A complimentary meal will be provided. Advance registration is required for an accurate meal count.

Homestead, July 8, 5:30 p.m.

Immokalee, July 9, Noon

Belle Glade, July 9, 5:30 p.m

Lake Alfred, July 10, Noon

Wimauma, July 10, 5:30 p.m.

Fort Pierce, July 11, Noon

Sebring, July 11, 5:30 p.m.

Representatives from J. Rolfe Davis Insurance will discuss the requirements and implications of the law.

Topics will include:

• Who will be required to provide health insurance

• Which employees must be covered

• Penalties associated with the law

• How H-2A employees are affected

Please forward this to anyone who you think would be interested; the event is not limited to FFVA membership. Contact FFVA at (321) 214-5200 for more details or if you have questions.

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