Provide Coverage Or Pay A Penalty
Especially worrisome to business owners is the employer mandate. As Roper explains, starting in 2014, employers with at least 50 full-time equivalent employees will have to make available a minimum level of insurance to employees who average 30 or more hours per week, or pay a penalty of $2,000 per employee excluding the first 30 workers.
Employers providing coverage that's deemed unaffordable under the rules are subject to a penalty of $3,000 per year, per employee who obtains federally subsidized coverage on an exchange, adds attorney Sarah Millar, a partner at Drinker Biddle & Reath LLP.
Frankly, some business owners will probably just pay the fine, says attorney Bruce Howell, a shareholder at Schwabe Williamson & Wyatt, PC, in Portland, Ore.
Figuring out who is full time can be a mind-numbing exercise. "What if the client has several separate corporations each with 10 or 15 full-time employees? We've had that question," Howell says.
With the test based on full-time equivalency, businesses with a substantial part-time workforce could be subject to the rule, Millar observes.
Clients with growing businesses that have fewer then 50 full-time employees need to understand the requirement so they appreciate the implications of adding staff. "The cost won't be just wages and employment taxes. It's going to include health coverage or a penalty for not providing coverage," Millar says.
Another unwelcome rule hits business owners with more than 200 full-time workers. These employers will be required to automatically enroll full-time employees in the company's health plan (with a waiting period of up to 90 days). Employees must be given a chance to opt out, Millar says. Originally scheduled for 2014, this requirement won't take effect until the Department of Labor issues final regulations, which are not expected by 2014, according to Millar.
Not effective until 2018 is a nondeductible excise tax on employers who offer high-value, or "Cadillac," plans. The tax applies to plans with a value in 2018 greater than $10,200 for single coverage or $27,500 for family coverage. It is 40% of the value above these thresholds, says Raymond Paolini, a professional-services advisor at Roper Insurance & Financial Services.
For private wealth advisors, the wide net of health-care reform means beaucoup opportunity to serve clients. As LaBrecque says, "Besides the Affordable Care Act, they could have called this the Affordable Compensation Act for Advisors, because it's keeping us pretty busy."