Affordable Care Act

Plan decisions tough: ACA just one variable

By
From the March 2014 issue of Columbus CEO

Many small business owners Kevin Conrad meets around the state cling to a belief that the Affordable Care Act can still be repealed.

“Their energies need to be in answering the question: ‘Do you need to provide medical insurance to get and keep your employees?’ ” Conrad said.

Small businesses have to consider a slew of variables to answer that question, from the industry they’re in to the strength of their balance sheet. But Conrad, past president of the Ohio Association of Health Underwriters and head of Rogers Benefit Group’s Ohio operations, said he has seen a pattern in recent months.

In the Columbus metro area, where there’s greater competition and higher wages, more small businesses are inclined to keep offering health coverage. In rural areas, where competition is often less intense and wages are lower, it often makes more sense for businesses not to offer benefits.

Instead some choose to send workers to the government-run health insurance marketplace, where many can qualify for cost-sharing subsidies or income-based tax credits that lower their premium.

2014 was supposed to be the year when the outlook became clearer for many small businesses. But much uncertainty remains. First came a one-year delay of the mandate that employers with the equivalent of 50 full-time workers offer health benefits or pay a penalty. Then the launch of the online small business insurance marketplace was postponed.

“It’s difficult to project what the future’s going to hold for my company,” said David Peabody, who owns a landscaping business in Columbus that employs about 65 workers, many of them seasonal. While glad the employer mandate was delayed, he still doesn’t know whether he’ll eventually have to comply with it.

He’s walking a fine line. If he employs the equivalent of 50 full-time workers, he must offer them adequate coverage under the law or pay a penalty that would have consumed about a third of his profits in 2012. If his workforce falls below that threshold, he can opt not to offer insurance and let his workers shop for coverage through the government-run marketplace.

Deciding whether to offer health benefits isn’t always easy. Employers don’t yet have all of the guidance they need from the federal government about the tax implications of offering coverage, Conrad said. Some still think they must offer their workers health benefits because they always have, or that the benefits they offer are superior to what their workers can purchase directly from insurers. Thanks to the range of health benefits now required by law, he said, many policies that individuals buy directly from insurers are just as good as employer-sponsored coverage.

Jayma Davis, whose family owns Café Brioso on Gay Street in downtown Columbus, also is uncertain of the next step for her business when it comes to health benefits, Eight of the eatery’s 13 workers have coverage through their jobs there.

Like Peabody Landscape Group, Café Brioso stuck with its current coverage this year rather than opt for a new small business marketplace plan. Davis considers their benefits better.

But that meant Café Brioso had to give up a small-business tax credit worth $3,207. Starting this year, that tax credit is only available to companies that buy small-business marketplace plans.

“It’s almost like we got penalized because we were offering a nice affordable plan to our employees,” Davis said.

Some employers will undoubtedly pay more to cover their workers under the new healthcare law, Conrad said. Others need to be open to the idea that the law could save them money.

Conrad recalls one business in southeast Ohio near Marietta with three employees, two of whom had employer-sponsored health coverage. One was 63 years old; the other, 47. Both had health conditions that had meant higher premiums for the company in the past, to the point that it was paying $3,183 per month for a plan with a $500 annual deductible.

Thanks to the Affordable Care Act, the cost of comparable coverage was only $1,632 per month. The business owner, having heard much negative publicity about the health law, was initially reluctant to sign on.

“I had to convince him that he was giving up nothing,” Conrad said.

Ben Sutherly is a reporter for The Columbus Dispatch.