Official admits to treating company involved in fatal Oct. 6 crash with "kid gloves."
ATLANTIC CITY, N.J. — The details on how small business owners should comply with Obamacare was the most timely topic for operators and industry vendors who gathered at LCT Show East Oct. 27-29.
Although Obamacare is beset with major structural problems that could cause it to eventually implode, business owners still need to prepare for it in case it works out, even if in modified form. The Republican-controlled House of Representatives already has voted to repeal Obamacare, officially known as the Affordable Care Act, more than 30 times, but the Democratic-controlled U.S. Senate will not consider a repeal.
Obamacare is plummeting in popularity as millions of Americans lose their health care coverage and face rising premiums. As a result, President Obama’s approval and likeability ratings are tanking to levels approaching the low levels seen by President George W. Bush in his second term.
As of this writing, the individual mandate to purchase health insurance has been delayed until March 31, 2014, which followed an announced delay of the employer mandate to provide coverage to Jan. 1, 2015. That gives business more time to make sense of the complex rules. Obamacare enrollment was supposed to go live on Oct. 1, more than three and a half years after its passage by then-majority Democrats, but the system has been plagued with glitches and embarrassing snafus.
“Our industry is always, always under attack, whether it is a national issue or local issue,” National Limousine Association President Gary Buffo said at the beginning of the Obamacare presentation, called the NLA Legislative Session.
“The single most important issue facing all of you is the implementation of Obamacare,” NLA board director Scott Solombrino told attendees. The CEO of Boston-based Dav El Chauffeured Transportation Network added, “We’re going to help you in the next 12 months on how to deal with this issue.”
NLA leaders warned operators not to think they are exempted just because they have fewer than 50 employees, since many variables and calculations determine whether a company must offer coverage. But, generally, if a company has fewer than 50 full-time employees and no part time ones, it does not have to offer health insurance.
The Obamacare update was put together by NLA lobbyists Louie Perry and Laura Bozell, both of Cornerstone Government Affairs in Washington, D.C. They made similar presentations to NLA and industry association members at the Annual NLA Day On the Hill event in May, and at the BostonCoach affiliate meeting in July.
According to Perry and Bozell:
For small businesses, the 2,000-page act redefines company sizes and employee statuses for the purpose of determining whether a company has to offer health insurance. The health insurance exchanges for small businesses were supposed to be online on Nov. 1 but the Department of Health and Human Services (HHS) delayed them once again, this time to an unspecified date at the end of November.
According to the ACA, a large employer is defined as a company with 50 or more full-time employees. This is the first time Congress defined what it means to be a large employer. HHS also will measure hours of part-time workers to calculate the equivalent of full-time workers. “It is a fancy algorithm that only the federal government can come up with,” Bozell said.
HHS will look at all subsidiary and partner companies of a business to count employees, and if there are 50 employees working across the business ventures, the employers must offer health insurance at all businesses. Employers that do not provide affordable health insurance to all of their employees will be subject to penalties.
The “look back” period for calculating employee hours is no less than three months and no greater than 12 months, and must factor in sick days, holidays, vacations, and maternity leave hours. Employees who work more than 30 hours per week or 130 hours per month are considered full time. This is the first time ever that a federal law defines a full-time work week as 30 hours, not the standard accepted 40 hours.
“It’s not just good enough to offer health insurance, but you also have to offer minimal essential coverage,” Bozell said. That means employers are required to offer health insurance that covers at least 60% of employee health costs, known as a bronze plan, with the employee picking up the other 40% of costs. A silver plan is based on a 70/30 cost ratio, while gold is 80/20 and platinum is 90/10.
Employers also must provide health insurance that is deemed “affordable.” If the employee’s share for the lowest cost plan is 9.5% or less of their household income, then the plan is affordable. It does not matter if an employee purchases a family plan. The measurement is against the self-only premium. Recognizing the difficulty in calculating household income, the Obama Administration has announced three additional measurements for determining affordability:
The ACA considers wages as the figure reported in Box 1 of the W-2 IRS form, defined as taxable wages minus any contributions to Health Savings Accounts, flex accounts, or 401K plans. For chauffeurs who work full time some weeks and part time during others, employers need to calculate their status based on the length of the selected look back period (3 to 12 months) to reach a full or part-time designation.
Bozell warned that while 1099 (contractors) do not count toward the insurance mandate, the IRS already is catching employers shifting W2 employees to 1099 contractors. The IRS is fighting this and watching for large conversions. If the agency deems such a move as a misclassification, it can result in the employer being fined for back pay, taxes and penalties.
The law requires employers to offer coverage to eligible employees and their qualifying dependents, identified as children under the age of 26. Spouses are not considered to be qualifying dependents. Health insurance offered to dependents does not have to meet the affordability test.
Employers will not be held responsible if employees neglect to enroll in health insurance plans or fail to follow the rules for subsidies. “Your only obligation is to make an offer of health care coverage,” Bozell said. “As long as you offer, you are not subject to a penalty.”
Anyone can buy insurance via the ACA exchanges, but only 100% to 400% of poverty level incomes are eligible for sliding scale subsidies to buy via the exchanges. The IRS determines eligibility and pays employees directly on subsidies.
Employers do not have to shop for group plans through the exchanges. Most employers are likely to work with an insurance broker to find the plan that is best for their businesses and complies with the ACA.
Summing up the NLA’s work on behalf of limousine operators, Solombrino said, “Our sole purpose is to roll back regulations. There is no good regulation for chauffeured transportation. It costs you time, money and effort.”
Official admits to treating company involved in fatal Oct. 6 crash with "kid gloves."
10/23 update: As the public awaits a preliminary report on an accident cause, two recommendations after a 2015 crash would have affected the recent one.
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