What You May Not Know About Obamacare
NATIONAL REPORT -- Oct. 1 ushered in the first phase of the Affordable Care Act (ACA), more commonly referred to as Obamacare. Open enrollment began, which means Americans who are uninsured or want to replace the coverage they have now can start to compare and shop for comprehensive health plans through the online Health Insurance Marketplace.
Now that phase one has begun, the clock is ticking for the start of phase two, which will have a direct impact on thousands of convenience store operators. Larger convenience retailers uttered a collective sigh of relief when the U.S. government announced in July that it will provide an additional year before the mandatory employer and insurer reporting requirements of the ACA kick in.
The ACA requires employers with more than 50 full-time workers to provide health benefits as of Jan. 1, 2015 or face a $2,000 penalty per full-time-employee beyond the first 30 full-time employees. A full-time worker is defined as one who works 30 hours or more per week.
Although the one-year respite has definitely been welcomed by retailers across all channels, the deadline is not as far off as some might think, meaning that larger convenience store retailers must still make their Obamacare decisions quickly.
This is especially true for any retailer with 40 to 60 employees, which Mario Castillo, a labor and employment lawyer for Houston-based Monty & Ramirez LLP, refers to as "on the bubble," stealing from the popular NCAA basketball term.
"Many businesses were planning to make decisions in November or December when the law was set to go into effect in 2014," Castillo told CSNews Online. "Now, they are planning to make the same decision in late 2014. I advise against that for several reasons."
The main reason for implementing a plan now is that the federal government will determine the number of employees at a given retailer by looking at the average number of employees for at least a six-month period in 2014, the attorney noted. Hence, retailers looking to avoid penalties cannot simply dip under the 50-employee threshold on Dec. 31, 2014. They must be under the 50-employee number for the prior six-month period.
Other insights you may not know about Obamacare include:
- For any employer that doesn't already offer health insurance and is near or beyond the 50-employee threshold, the first thing they should do is conduct an independent third-party study in an attempt to whittle down how many workers will seek coverage under the ACA once 2015 rolls around, Castillo advised. A human resources firm, consultant or law firm familiar with the c-store industry are among the third-party groups that can conduct this survey. Although it may save some money, retailers should not conduct the employee survey themselves. "Doing it yourself can open up your business for retaliation claims," he said. "If you let an employee go after they answer a survey saying they would seek health care coverage under Obamacare, you open yourself up for potential [legal] problems."
- Many companies are unaware that several employees will reject Obamacare coverage. That's why an employee survey is so important. Workers who obtain medical coverage on a spouse's plan, employees under the age of 26 who have medical coverage on a parent or guardian's plan, and those on Medicare or Medicaid are likely to opt out of coverage under the ACA. Minimum-wage workers are another group who may opt out of Obamacare coverage. In addition, registered immigrant workers -- or those who will be considered "provisional" workers under a proposed immigration reform bill in the Senate -- will not be eligible.
- A bill introduced on Aug. 2 by U.S. Rep. Dan Lipinski (D-Ill.) could further reduce the number of employees eligible. If enacted, the bill would raise the definition of a full-time employee from one who works 30 hours per week to a 40-hour-per-week threshold.
- If a retailer cannot afford to pay health care premiums for all employees who are expected to seek coverage under the ACA, they have one lesser-known choice. Employers can elect to offer minimum essential coverage (MEC) — also known as "skinny plans" or "bare-bones" plans — to employees. There are several catches to MEC plans, but they do provide a middle road for employers, experts say.
- If a company opts not to offer any insurance, most employers know they need to pay a $2,000 per-employee fine beyond the first 30 employees for any company with 50 or more employees, Castillo said. That's called the "strong" penalty. But there is also a "weak" penalty that fines an employer $3,000 for every employee that goes through the exchange, the formal system used to seek coverage under the ACA. The $3,000 fine is only charged for each employee who seeks coverage on or after Jan. 1, 2015.
- Another option to perhaps avoid either penalty is for retailers that own multiple stores to create separate entities for each. A c-store retailer who owns two stores that employ 60 workers, for example, can avoid government fines because he or she is considered to have two separate companies, said Dr. Keith Kantor, a Norcross, Ga.-based Obamacare expert. There are drawbacks to this idea. For example, an individual cannot put both companies in his or her name. The second entity can be owned by a relative, but cannot be someone who files on the same tax return. Hence, a business cannot simply be placed under a spouse's name. Other ownership restrictions also apply.
- Although accepting the strong and weak penalties are certainly options, paying a fine should only be used as a retailer's last resort, according to Castillo. "The penalty is not tax-deductible. Paying [insurance] premiums is," he said. "So basically, a retailer is being taxed on its income that it uses to pay the penalty. That doesn’t make any sense unless the penalty is much less than what the health care premiums would cost."
For more on Obamacare, check out the Convenience Store News Show Daily distributed at the NACS Show.