’13 Health Care Year of Determination

March 25, 2013 by · Comments Off on ’13 Health Care Year of Determination 

Editor’s Note: The following news release comes from the National Association of RV Parks and Campgrounds (ARVC).

Regardless of what you think about the Patient Protection and Affordable Care Act (ACA), which was signed by President Obama on March 23, 2010, there is no question any longer that it is the law of the land. The U.S. Supreme Court has upheld its constitutionality. And now, all the deadlines and requirements related to health care and health care insurance imbedded within the law are poised to kick in.

For America’s small business community, which includes nearly all of ARVC’s approximately 3,000 members, calendar year 2013 is being called by some as the “year of determination.”

That is, businesses must determine whether they are “small” or “large” under the ACA, and this determination in turn generally depends on the number of full-time employees.

In 2014, employers will be expected to know whether or not they are “large” or “small” so that they can comply with the law. This article focuses mostly on the ramifications for “small” businesses since most ARVC members fall into that category.

Generally, “small” businesses are those with fewer than 50 full-time employees (FTEs). FTEs are individuals who worked an average of 30 hours per week (130 total monthly hours). Part-time employees’ hours are converted into FTE employees to determine employer size. For example, if six employees worked five hours per week, they would count as if the company had one additional FTE.

It should be noted that under ACA, an employer is not considered “large” if it has 50 FTEs for 120 days or less during the calendar year. The Internal Revenue Service and Department of Labor are expected to provide additional guidance on determining seasonal workers. Through 2014, employers are permitted to make a “reasonable, good faith interpretation” of the term “seasonal employee.”

The ACA does not require small businesses as defined under ACA to provide health care insurance. However, beginning on Jan. 1, 2014, small businesses with 50 or fewer FTEs will be able to purchase coverage through the Small Business Health Options Program (SHOP) exchanges.

These exchanges are competitive marketplaces where small businesses can find health coverage from a selection of providers, and pool their risks and thereby lower their administrative costs. Open enrollment through SHOP exchanges begins on October 1, 2013. Employers with up to 100 FTEs will be able to participate in SHOP beginning in 2016. States may limit the small business definition to no more than 50 FTEs until 2016.

Furthermore, the ACA offers tax credits for eligible small businesses that choose to provide health insurance for their employees. To qualify for a small business tax credit of up to 35 percent (25 percent for non-profits), the business must:

  • Have fewer than 25 FTEs.
  • Pay average annual wages of less than $50,000.
  • Contribute 50% or more toward employee health insurance premiums.

In 2014, the tax credit increases to 50 percent (35 percent for non-profits), and is available to qualified small businesses which participate in the SHOP exchanges. Small businesses can claim the credit through 2013 and for two additional years beginning in 2014.

In contrast, beginning in 2014, businesses with 50 or more FTEs (or full-time equivalents) that do not offer affordable health insurance that provides a minimum level of coverage to substantially all of their FTEs (and their dependents) may be subject to an employer shared responsibility payment if at least one of their FTEs receives a premium tax credit to purchase coverage in an insurance marketplace or exchange.

If a business is at or near this threshold level of FTEs, it is important to understand how the rules may apply and how the shared responsibility payments could be triggered.

Stated another way (from the perspective of “small” businesses under ACA), employers with fewer than 50 FTEs are exempt from the new employer shared responsibility policies, and they do not have to pay an assessment if their employees receive tax credits through an exchange.

Finally, since some ARVC members are self-employed and may have no employees, it is important to note that the self- employed will be able to purchase health insurance through individual exchanges beginning on Jan. 1, 2014.


Attorneys Weigh In on Health Care Reform

June 19, 2012 by · Comments Off on Attorneys Weigh In on Health Care Reform 

Amanda SchippKevin Woodhouse

Editor’s Note: The 2012 Indiana CEO Survey shows that corporate executives continue to express concern regarding health insurance expenses and the uncertainty surrounding the Patient Protection and Affordable Care Act. However, some clarity should come soon as a decision from the United States Supreme Court is expected this month on the constitutionality of the act. The following opinion piece was provided by Amanda Schipp and Kevin Woodhouse, attorney and partner, respectively, with Ice Miller LP’s Health Care Practice Group and appeared on the Inside Edge e-newsletter.

After months of litigation, in March 2012, the Court heard a historic three days of oral argument addressing the following four issues: (1) the proper timing of the appeal under the Anti-Injunction Act; (2) the constitutionality of the provision requiring almost every individual in the United States, beginning in 2014, to maintain minimum health insurance coverage (the Individual Mandate); (3) the severability of the Individual Mandate from the rest of the Act should it be held unconstitutional; and (4) the constitutionality of the Medicaid expansion.

Perhaps, the most significant and contentious of the provisions is the Individual Mandate, under which a penalty can be assessed for every month in which certain required minimum health care coverage is not maintained. The Act’s challengers, which include 26 states, four individuals and the National Federation of Independent Business (collectively, the Petitioners) argued to the Court that the Individual Mandate is not a valid exercise of Congress’ legislative powers. Specifically, the Petitioners argued that the Act exceeds the bounds of the Commerce Clause, as it attempts to regulate the health care market by requiring participation in a separate insurance market. The Government defended the action on the grounds that the two markets are interconnected, explaining that uninsured participation in health care market causes cost shifting and significant distortion in the insurance market.

Some of the justices expressed concern that the Individual Mandate “changes the relationship of the federal government to the individual in a very fundamental way” as it imposes an affirmative duty upon the individual to participate in commerce. Ultimately, the Court’s decision may depend on whether the Government was able to convince the Court that the Individual Mandate would not lead to a slippery slope of a federal government with unlimited power to regulate individual conduct, or as many pundits have posited, a federal government that can require everyone to buy broccoli.

In the event that the Individual Mandate is found to be unconstitutional, the Court will need to decide whether the rest of the Act is severable, or if the entire Act, including the many reforms which have already been in effect since 2010, must be struck down. The Petitioners argued that if the Individual Mandate is held unconstitutional, the entire Act should be invalidated as the Individual Mandate is the heart of the Act which supports the other insurance reforms. They argued that removing the Individual Mandate while affirming the other reforms would cause a significant increase in the cost of health insurance, as the Individual Mandate struck an essential fiscal balance in the Act. The Government countered that the entire Act should stand (with the exception of the guarantee issue and community rating provisions) as the “lion’s share of the Act” has nothing to do with the Individual Mandate and many of the provisions are already in effect. One justice characterized the Court’s decision in this regard as a choice between “a wrecking operation” or a “salvage job.”

While it remains to be seen how the Court will come out on these issues, it is clear that the decision will greatly impact the health care industry. The Court’s decision likely will not finally resolve the uncertainty as to the long-term future of health care, but the decision, regardless of the specific outcome, will provide Indiana’s corporate leaders more clarity over the short-term.

Please contact Kevin Woodhouse at (317) 236-2154 or or Amanda Schipp at (317) 236-2426 or or any other member of Ice Miller’s health care practice group if you have any questions.

Note: This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader should consult with legal counsel to determine how laws or decisions discussed herein apply to the reader’s specific circumstances.