Category Archives: Health Care Reform – OBAMACARE

Who is an Employer under Health Care Reform?

Employers with 50 or more full-time equivalent employees must comply with the mandate to offer affordable health insurance to its full-time employees beginning in 2014. (Delayed to 2015 by President Obama in July 2013.)

Full-time is defined as 30 hours per week, 52 weeks per year, or 1,560 hours of wages paid in a year’s time.

A simple calculation to see if an employer must comply is to multiply the 1,560 hours times 50, which equals 78,000 hours of wages paid in a year’s time. If an employer is paying that many hours or more, they have achieved 50 full-time equivalent positions in a year. The Affordable Care Act has its own calculations that are slightly different to accommodate partial years and quarters of employment, but this is essentially the concept. And if an employer comes under the Act’s mandate to provide affordable health insurance, it must be offered to all employees who work 30 hours a week or more.

The Affordable Care Act defines an “Employer” to be a company or a group of companies under “Common Control”. Common control is defined as the same five or fewer people owning at least 80 percent of the companies. This common control is further complicated by the rules of attribution with “constructive” stock ownership. An individual can be considered owning the stock of his or her spouse or children, grandchildren or parents. This can get complicated when multiple generations of a family are involved in their respective business ventures. This also means that an employer can not separate a company into multiple entities to prevent having 50 full-time equivalent employees, unless those new, separate entities no longer fit under the definition of common control.

Under the rules of “Common Control”: what one spouse owns, the other also owns. Therefore, if each partner of a couple in a marriage owns a business, the employees of both businesses are counted as one business for purposes of the 50 full time equivalent calculations.

Health Care Reform is an Individual Mandate

Health Care Reform Act in its entirety

The concept behind “ObamaCare” is that the individual must purchase health insurance coverage for himself or herself and his or her dependents. Check it out on page 143 of the ACT shown above. You can’t pay for healthcare services as you use them; you must first purchase health insurance.

If you’re self-employed, you must purchase health insurance. If you work part-time and your employment does not provide health insurance, you must purchase health insurance. If you work full-time and you don’t like the health insurance policy provided by your employer, you must still purchase health insurance from somewhere.

Purchasing health insurance doesn’t guarantee access to healthcare; it only means that you have prepaid for future healthcare services, as long as you continue to pay the monthly insurance premiums, and IF you can find the healthcare services.

I speak of “finding” health care services because of concerns that I see already BEFORE health care reform. Right now, my peers in healthcare complain that Medicare only pays 25 cents on the dollar and that Medicaid only pays 12.5 cents on the dollar of healthcare charges and that it is a difficult job to set compensation for 1700 angry doctors in one healthcare organization. If we have angry doctors now, and government programs are not paying the true cost of healthcare now, what will happen with forced insurance coverage? Will there be enough doctors who want to work under conditions of very limited compensation? Will there be enough healthcare organizations that will financially survive to provide healthcare services?

We have all heard about the penalty tax for not purchasing health insurance; it starts at $95 in 2014 and goes up to $695 in 2016 or 2.5% of your taxable income, whichever is greater, and it is to be paid on your income tax return. Much has to be determined yet, on how to account for health insurance coverage. Can you imagine what that will do to income tax return information reporting? Perhaps a dependent deduction will only be granted the parent who provides health insurance? Tracking compliance will involve your personal income tax return and access to health care. If you go to the hospital for emergency care and you don’t have health insurance coverage, will hospitals be required to report you to the IRS for noncompliance?

There are a lot of questions on how this health care reform will be implemented, and subsequent blogs will explain what is currently known and written into law. The most important concept though is that the individual is the responsible party for purchasing health insurance.