Tulsa Attorneys: Many Small Companies May Cut Health Insurance Coverage

Article excerpt

Many small businesses may choose to reduce or eliminate their employee insurance coverage under evolving federal health care regulations, a pair of McAfee and Taft employee benefits attorneys said Tuesday.

"We're going to see a lot of this happening," attorney Bill Freudenrich told a Tulsa Area Employers Council audience at the downtown Doubletree by Hilton hotel.

Attorney Brandon Long said employers must look at their existing programs and determine whether they could run afoul of the looming no-coverage tax or the inadequate coverage tax.

More than 500 pages of new regulations issued over the last month clouded those issues in some areas, he said, while simplifying them in others. In several instances he advised executives to meet with their consultants or attorneys over several "very tricky" elements these rules present.

Long said the most difficult determination involves figuring out how many full-time employees a company has. The number generally aligns with people working 30 hours a week or 130 hours a month. Firms must keep running tabs of part-time worker hours over extended periods to factor in their full-time-employee equivalents, with variable or seasonal workers requiring still more precautions.

The no-coverage tax, which targets employers with more than 50 full-time workers, charges companies $2,000 a year for each full- time worker (with that employee total reduced by 30) if those employers do not offer minimum essential health insurance coverage to at least 95 percent of that full-time staff and dependents.

Companies with less than 50 full-time employees face the inadequate coverage tax if they fail to offer minimum, affordable coverage for employees and dependents. But these employers are only charged that $3,000 fee for each employee that actually gets coverage and a subsidy from the state health care exchange.

"If your plan qualifies for health care reform and you provide all the essential benefits and it meets all the essential guidelines, it's going to meet the minimum value," Long said, noting that spouses are not included as dependents.

As for keeping it affordable, Freudenrich said the lowest single- coverage policy should cost less than 9.5 percent of the employee's annual income on the W2 form.

Considering the time and cost of monitoring employee hours, much less the cost of complying with health-care expenses under the Consolidated Omnibus Budget Reconciliation Act (COBRA), Freudenrich said some of his small-business clients have chosen to contain costs by offering marginal or no coverage, knowing they face an inadequate coverage fee only if an employee resorts to the state exchange. …