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
"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. …