You ask, we answer: Here’s how Obamacare’s employer mandate works

April 15, 2013
(bigstock)
(bigstock)

Welcome to Health Reform Watch, Sarah Kliff’s regular look at how the Affordable Care Act is changing the American health-care system — and being changed by it. You can reach Sarah with questions, comments and suggestions here. Check back every Monday, Wednesday and Friday afternoon for the latest edition, and read previous columns here.

A few weeks ago, I answered a set of questions that a reader sent me about how the individual mandate will work. Ever since, I've gotten lots of other questions about what will happen when the main parts of Obamacare kick in in 2014. I'm going to try to answer those e-mails here, about twice a month. Feel free to e-mail me here with any question you might have.

A few days ago I heard from a reader who runs an 80-employee company who is weighing whether to provide health insurance next year. This reader asked that I not identify the company or location, as the topic of providing insurance is a relatively heated one.

"While I believe drawing the line in the sand at 50 employees is inherently unfair, my questions concern the lack of clarity with regards to implementation and compliance with the law," the reader writes. "Despite my best efforts, I've had a difficult time finding clear answers to big questions about the health care law."

So let's start with the questions.

The first one came out of reading this line in the Wall Street Journal, which said “employers who offer policies that meet those requirements won't have to pay penalties, even if their employees don't sign up.” Is this true?

In a word: Yes! The health-care law requires companies with more than 50 employees to offer insurance to those who work 30 hours a week. That insurance must cover a set of core set of benefits and be affordable (which the law defines as premiums costing no more than 9.5 percent of an employee's income).

The company has to offer that insurance, but it can't require an employee to sign up for the benefits. So employers do not get fined if a worker does not purchase coverage. The employee does, however pay a $95 fine in 2014 for not carrying coverage (that would rise to $695 by 2016). So there is a fee to pay for not buying that coverage, although it's not nearly as large as paying monthly health insurance premiums.

A follow-up: This seems inherently unfair. The monthly premium for our current health insurance plan costs $484 per month for a single 40 year old employee. A $10/hour employee (someone on our low end) who works a full year will earn about $20,800 per year. 9.5% of that is $1,976 or about $165 per month. To think that a $10 per hour employee could absorb that cost is crazy.

Health policy experts do worry about the issue that this reader raises: That low income workers will not accept the health insurance they're offered. A report from the benefits consulting firm ADP found that, right now, most low-earning workers do not buy the health insurance benefits that they are offered.

The ADP report found that, among workers earning $15,000 to $20,000, 37 percent elected to purchase health benefits when they were made available.

“In 2014, there are going to be a number of people who are eligible for benefits for the first time,” ADP’s Christopher Ryan told me at the time. “These additional people are primarily lower-income and the critical question is: To what extent, if they have the opportunity to purchase benefits, will they participate?”

Are employees who receive employer provided health insurance eligible for subsidies if their income is below 400% of the poverty level?

No, workers who receive employer benefits—those that meet the coverage and affordability requirements discussed above—do not qualify for federal subsidies. The thinking there is that these workers already have access to an affordable health insurance plan, so they won't need the government assistance.

It's worth noting there has been some lobbying to change this part of the law, at least for union plans. The Wall Street Journal reported a few months ago on a push to allow workers to receive both tax subsidies and employer benefits. The Obama administration told the Journal that the issue was subject to regulations still being drafted.

KLIFF NOTES: Top health policy reads from around the Web. 

Nevada has bused thousands of mental health patients out of the state for treatment. "Over the past five years, Nevada's primary state psychiatric hospital has put hundreds of mentally ill patients on Greyhound buses and sent them to cities and towns across America. Since July 2008, Rawson-Neal Psychiatric Hospital in Las Vegas has transported more than 1,500 patients to other cities via Greyhound bus, sending at least one person to every state in the continental United States, according to a Bee review of bus receipts kept by Nevada's mental health division. Cynthia Hubert, Phillip Reese and Jim Sanders in the Sacramento Bee

Can remote ICU monitoring work? "Like many expensive innovations in medicine, from robotic surgery and designer drugs to electronic medical records, tele-ICUs have shown their most stellar results in studies linked to the companies that sell the systems; some hospitals in these studies cite as much as a 40 percent decline in mortality and a tenfold return on investment. In contrast, some independent studies published in the last five years have found no significant effect on survival rate, complications or length of stay, and have found that tele-ICUs brought new budgetary burdens, not payoffs." Nina Bernstein in the New York Times

 

 

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Theresa Poulson | April 15, 2013