Editor's note: The following article was written by Christine Souza, an assistant editor of the California Farm Bureau Federation's publication, Ag Alert.
With President Obama about to be sworn in for his second term, individuals and employers alike are thinking more seriously about a key facet of his first term: the new federal health care law, how it will be implemented and what is required to comply.
"Our membership is concerned about how this is going to affect our employees. How is this going to affect providing them what they need?" said Glenn County Farm Bureau President Dave Toney. "We also would like to know what this could cost."
California Farm Bureau Federation Director of Labor Affairs Bryan Little said until the federal government finishes issuing regulations and guidance to implement the Affordable Care Act, and until the state of California begins accepting customers for its health insurance benefits exchange, there is no way to predict accurately what the cost will be for any individual agricultural employer.
"Everybody's situation is going to be a little bit different. Trusted professionals like tax advisors and insurance brokers will be able to give farmers a lot of guidance. But in the end, agricultural employers will need to make some hard decisions about whether it will be cost-effective to continue providing insurance for their employees, or to start providing it," said Little, who also serves as chief operating officer for the Farm Employers Labor Service, a CFBF affiliate.
While the law requires certain employers to provide health insurance coverage for employees by Jan. 1, 2014, many questions remain unanswered, Little said, as agricultural employers wait for more clarity from the Internal Revenue Service about determining which employees are considered full-time and which are considered seasonal.
"The key question that people are going to have to answer is whether they are going to have to provide health insurance for employees on Jan. 1, 2014," Little said.
To do this, he said, agricultural employers should first become familiar with the law, which outlines requirements for different-sized employers:
- Small employers—with fewer than 50 full-time-equivalent employees—are generally exempt from penalties related to not providing health insurance. A small employer's uninsured employees may be eligible for expanded Medi-Cal coverage or for subsidies to help purchase coverage in the state exchange. Certain small employers that offer coverage to workers may be eligible for tax credits, if they purchase coverage through the Small Business Health Options Program Exchange and pay at least 50 percent of the total premium.
- Large employers—those with more than 50 full-time-equivalent employees—will be required to offer coverage or potentially pay a $2,000 fine for each full-time worker if just one employee receives a subsidy to purchase insurance through a state exchange. A firm's first 30 employees will be subtracted from this penalty payment calculation. Large employers who offer health insurance that fails to meet ACA minimum value requirements are treated the same as if they provided no coverage—in other words, the same potential penalty might apply. If a large employer offers qualifying coverage, but seeks employee contributions for the coverage that exceeds 9.5 percent of an employee's wages, the employer could be assessed a penalty of $3,000 per employee for whom the contribution exceeded 9.5 percent of income.
- Employers are exempt from penalties for part-time workers—those who work 30 or fewer hours per week.
- Employers with seasonal workers—defined as those working fewer than 120 days in a year—will not be considered subject to the large-employer coverage requirement, as long as the only time they exceed 50 full-time-equivalent workers is during those seasonal employment periods.
- Employers with variable-hour or seasonal employees who work more than 120 days will need to consult IRS guidelines to determine appropriate coverage requirements for these types of workers.