ALERT!
Health Care Reform: HRC Taking A More Active Role for Employers!
By: Human Resources Consortium, Inc.
Citatation: Atkinson, Andelson, Loya, Ruud & Romo, A Professional Law Corporation & Littler Mendelson Employment Labor Law
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Due to the potential impact health care reform will have on local businesses, the HRC is taking on a more active role in educating business owners about this topic.
With the support of Atkinson, Andelson, Loya, Ruud & Romo, A Professional Law Corporation and Littler Mendelson Employment Labor Law, the HRC is able to provide valuable insight. Below are excerpts taken out of our bi-monthly Informant Newsletter. Please note, that the information provided below is in no way, shape or form the rendering of legal advice or the offering of legal interpretation of the Patient Protection and Affordable Care Act (PPACA) and the regualtions contained therein. The HRC strongly recommends that you consult with appropriate legal counsel.
March 2010: Introductory
It’s happened…health care reform is now law.
Outside of the pending law suits that states are now threatening to impose against the new health care law, how will this law effect employers and businesses alike? Under the new health care law, “employer responsibility” requirements will likely have the most impact on businesses.
According to Littler Mendelson Employment Law Firm, under the Patient Protection and Affordable Care Act (H.R. 3590), “…an employer is not required to provide or maintain insurance, but those with 50 or more employees would face a penalty to help defray the cost of health insurance if any employee receives government subsidies to purchase their own insurance through a health insurance exchange because the employer plan is deemed unaffordable, of if the employer does not offer cover age at all.”
Littler Mendelson further indicates, starting in 2014, “the employer would pay:
- the lesser of $3,000 per full-time worker who obtains a tax credit or $750 times the total number of full-time workers if the insurance it does provide is considered inadequate or too costly;
- If the large employer (50 or more full-time employees) does not offer insurance at all, it would need to pay $750 per full-time worker if any employee obtains tax credits for the purchase of health care. However, the reconciliation bill (set to be voted upon in the House) may increase the penalty greater than $750, up to $2,000.
- Small businesses will receive assistance in offering health insurance to their workers. According to Litter Mendelson Employment Law Firm, businesses with fewer than 25 employees and average annual wages of $50,000 or less will receive a tax credit of up to 35% of the employee’s premium to help cover the cost of providing health insurance to their employees. This tax credit will begin this year (2010).
- In 2014, when the state health insurance exchanges become operational, eligible employers who purchase coverage for their employees through the exchange can receive a tax credit for two years of up to 50% of the employee’s premium. In 2017, states have the option of expanding this to large employers.”
Review Article
May 2010: Large Businesses
The HRC has been continuing its efforts to learn more on the topic of health care reform. There is a lot of information to absorb and we have learned a great deal.
For the purpose of this article, we will be focusing on large businesses. Effective in 2014, large businesses will experience the largest impact. Large businesses, according to the Patient Protection and Affordable Care Act (PPACA), are defined as businesses having 50 or more full-time employees. In a presentation provided by Atkinson, Andelson, Loya, Ruud & Romo, A Professional Law Corporation, large businesses will be required to “…pay a penalty of $2,000 per employee if employer fails to offer health coverage and has at least one full-time employee receiving a premium assistance tax credit or cost-sharing reduction created by the PPACA.” The first thirty (30) employees will be excluded from the calculation of the penalty. For example, if a large business has 50 full-time employees, the penalty will only be imposed on 20 of them (50 full time employees – 30 PPACA exclusion = 20 employees subject to the penalty).
The penalty stated above will be annualized which means that the penalty will be 1/12 of $2,000, assessed monthly. Using the example above, if a large employer (after taking into account the exclusion) ends up with 20 full-time employees, they will experience a penalty equal to $40,000, divided by 12 months (annualized), thus resulting in a monthly penalty of approximately $3,333.
For the sake of defining a full-time worker, the PPACA defines full-time as constituting 30 or more hours per workweek. This definition may conflict with some employers which define their full-time workers differently. Nonetheless, large employers will have to abide by the PPACA definition of a full-time employee.
Part time employees will also be affected. Part time workers will be aggregated to full-time equivalents by an equation outlined in the PPACA. This process may increase the total number of full-time employees for a large business, thus affecting any penalties that may be imposed.
In addition, the PPACA outlines protection from retaliation. According to a presentation outline by Atkinson, Andelson, Loya, Ruud & Romo,
“…employers will be prohibited from taking adverse action against employees because they received a tax credit or subsidy for a health plan, or “provided” information relating to any violation of the PPACA.”
