PABI reviews healthcare overhaulMay 25th, 2011 | By William Dilella | Category: top story
The healthcare reform was put together to provide coverage to the 32 to 54 million Americans who currently do not have coverage. It has been the largest change to this country’s healthcare system since the creation of the Medicare program.
“It was not just insurance, but that all Americans should have easy access to healthcare,” said Craig Fabacher, one of the CPA’s from Kuschner LaGraize, the firm that spoke at the May 18 Plaquemines Association of Business and Industry (PABI) meeting in the Belle Chasse Auditorium.
So, who doesn’t want healthcare? But this plan is an offer mandated by the federal government for all citizens, an offer neither businesses or citizens can refuse, at least as far as the law goes.
For individuals, there will be a minimum annual penalty of $95 for not possessing proper healthcare coverage. Opponents of the bill argue that the federal government has no legal backing for forcing anyone to purchase a product, even good health.
However, Fabacher pointed out there is currently no organization appointed to collect these fines. So, as far as any individuals without insurance, the fine has no teeth.
“If you don’t pay this tax, all they’re going to do is send you a letter…they have no way of collecting,” Fabacher said.
$466 billion in subsidies will be set aside to fund insurance for individuals at and marginally above the poverty level. The $466 billion is to last a decade, and cover families making up to four times the federal poverty level.
“This is the part of the bill that most people don’t agree with, because it’s essentially another form of welfare,” said Richard “Ricky” Rumney, the second CPA from Kushner LaGraize L.L.C.
But that is only one of the bill’s many points of debate.
One of the many aspects that has already been repealed in the national healthcare bill was the 1099 requirement. According to Rumney, this would have mandated that all businesses report for all their employees at all statuses, and saw this as a real revenue booster for the bill.
But opponents believe the 1099 requirement would instill yet another layer of bureaucracy for businesses.
“[The Government] has to find a way to raise revenues, and unfortunately I think that will be passed on to businesses,” said Rumney.
As the original focus of the healthcare overhaul has so broad a scope, it’s possible lawmakers did not foresee some of the collateral damage.
“They were going to penalize large employers who do not provide insurance, or even provide affordable insurance to employees,” said Rumney.
Essentially a good faith act. But this legislation applies to employers of large chains—the Walmarts, the Targets, the Sears—who might drop their full-time staff and replace them with a larger part-time workforce, rather than face these fines.
And if the employer is a steady business, money could be the motivator for the opposite effect the healthcare bill is designed for.
Some of the CPA’s numbers show that healthcare plans for companies average $6,000 per year. The Government’s fine for each full-time employee without proper coverage with-in a company is only $2,000. So mathematically, if these employers were forced to decide between full-coverage for every employee or to simply drop health benefits, dropping coverage makes more sense when it comes to the bottom-line.
As Rumeny put it, no one knows who the first employer will be to officially cut out healthcare all together, but there is a long line ready to follow them through that door.
However, those employers who do continue to pay for healthcare could see benefits themselves if they invest more into their employees, in the form of government cash.
Employers who chipped-in for healthcare benefits, specifically those who paid over 50 percent of their employees’ costs, were eligible for a 35 percent subsidy of those costs in 2010 alone according to Rumney.
“But you have to be paying at least 50 percent for your employees,” he said.
This overhaul is as difficult to apply as it was to pass. The conditions and qualifications shift from business to business with mathematical complexity, and the rules slide with the changes of every case. Part-time employees count sometimes but not others, which employee qualifies for state healthcare is not universal, and a few employees may not a small business make.
Eventually, there will be a state exchange, like Massachusetts which is already up and online. The exchange will give individuals, families and employers the chance to make an honest apples-to-apples comparison of the health plans available and if they qualify.
However, if a company is offering health plans, and the plan is deemed not to be affordable for a full-time employee, who then goes and qualifies for a plan on the exchange, the company is liable to face a $2,000 fine for every full-time employee.
As long as one employee makes 133 to 400 percent of the federal poverty line and who qualifies on the state’s plan, then his or her employer is then fined for every employee. (Those under 133 percent would qualify for medicare).
“If just one of your employees goes out and gets insurance from the state exchange you face a $2,000 fine for all your employees,” said Rumney. “And that is not deductible.”
To avoid the problem, Rumney said there are two options: an employer either must cover all costs or drop coverage all together.
Those companies with current plans have another issue to consider. If a plan was in effect before March 2010, it would not have to meet all the criteria of the new bill, but this will affect the company’s ability to shop for healthcare.
Referred to as Grandfather plans, these plans, according to Rumney, will still have to follow the rules on plan discrimination and pre existing conditions, but will not be subject to every new federal rule and regulation. However, if that employer seeks to update the employee healthcare plan, they lose that grandfather status and could see their rates rise significantly.
PABI members mumbled over some aspects, whispered approval over others, and flat out groaned at the mention of fines.
And while the future of the healthcare overhaul is debated and rehashed from now until full instatement in 2014, businesses and individuals will start seeing the side effects long before.
For more information about Plaquemines Association of Business and Industry visit www.pabigroup.com.