Health Care in the WorkplaceDR. ALICE LOUISE KASSENSJOHN S. SHANNON CHAIR OF ECONOMICS ROANOKE COLLEGE

The Management Institute

April 2015

Learning Objectives

By the end of the session, participants will be able to:

▪ Discuss the major sections of the ACA

▪ Know the resources available for navigating the ACA

▪ Understand the potential economic impact of the legislation on individuals

▪ Understand the potential economic impact of the legislation on businesses

▪ Understand the potential economic impact of the legislation on the economy

History of health insurance and the employerWhen did employers begin offering as a benefit?

Has the distribution of total compensation changed in the last few decades?

History of health insurance and the employer

▪ Emergence of employer based health insurance with WW II

WHY?

▪ Growth through 1980s

▪ Decline of 6.3 percentage points over 1987-2004 period

▪ Plateau with minor drop in Great Recession

What do you think were the drivers behind these trends?

History of health insurance and the employer

History of health insurance and the employer

0

10

20

30

40

50

60

70

80

90

100

%

All workers Part-time workers Full-time workers

Percentage of workers with access to employer-provided health insurance, private industry, 1991–2012

GROUP CHAT:

Why do you think

coverage for part-time

workers is less than

that of full-time

workers?

History of health insurance and the employer

Group work:

Get into groups and make the following lists:

1. Benefits of employer-based health insurance

2. Consequences of employer-based health insurance

Group question:

Would it be ideal to remove the link between employment and health insurance? Why or why not.

PPACAWhat are the major pieces of the legislation?

What resources are available?

PPACA Overview

▪ Individual mandate

▪ Employer mandate

▪ Affordable Care Organizations

▪ Medicaid expansion

▪ Community rating

▪ Essential minimum benefits

Group question: What do you think are the overarching goals of these

sections of the bill?

PPACA Overview

▪ State exchanges

▪ SHOP

▪ Local navigators and other personnel

▪ Accountants

▪ Employer HR Department

▪ Healthcare.gov

▪ Local information sessions

Individual mandateWhat are the rules?

What are the potential economic impacts for individuals?

Individual mandate

▪ Beginning in 2014, all individuals must buy health insurance with essential benefits (minimum essential coverage)

▪ Self-employed individuals can get health insurance through the state exchanges just as any other individual

▪ If do not buy health insurance, face a penalty (unless have an exemption)

▪ Penalty is the greater of:

▪ $95 or 1% of household income over the filing threshold in 2014

▪ $325 or 2% of household income over the filing threshold in 2015

▪ $695 or 2.5% of household income over the filing threshold in 2016

Individual mandate

Individual mandate – penalty example

▪ Suppose you are single without children and earn $40,000 per year.

▪ The filing threshold for 2015 for single individual is $10,300

▪ The amount over the threshold is $40,000 - $10,300 = $29,700

▪ 2% of this is ~$600

Pay $600 in penalty or at least $3,511.92 per year in premiums (risk of penalty is low since cannot be denied coverage if get sick)

What

would

you do?

Sample plan (2015)

NOTE: Plan estimate for female, single, no dependents, 40 years old, non-smoker, 5’4”, 120 lbs.

5 minute break

Employer MandateWhat are the rules?

What are the potential economic impacts for businesses?

Employer mandate overview

▪ Beginning January 1, 2016 employers with 50-99 FTE employees MUST offer health insurance that is:

▪ Affordable

▪ Offers minimum essential coverage

OR

▪ Pay a penalty

▪ If less than 50 FTE, not penalized if do not offer

▪ This is a delay in the employer mandate; employers with 100 or more workers begin January 1, 2015

“Pay or play” mandate

Employer mandate

Please read the handout titled:

“The labor market effects of the ACA’s employer mandate”

Employer mandate

▪ Employers must provide at least 60% of premium costs of employees health coverage

▪ Health coverage purchased for an employee cannot exceed 9.56% of their gross family income for employee only coverage.

▪ Employers must insure their employees if they have over 50 full time workers or they will face a penalty or "shared responsibility fee".

▪ The penalty for large businesses not covering their workers is $2000 per employee and $3000 if they purchase health insurance through the exchange with premium credits

▪ The first 30 workers are excluded from the penalty.

▪ High end insurance plans will be subject to a 40% excise tax.

▪ Employers with less than 25 full-time workers making less than $50,000 a year may be eligible for cost assistance via premium tax credits.

Affordability

Penalties

Employer mandate

▪ Minimum essential benefits:

▪ ambulatory patient services;

▪ emergency services; hospitalization;

▪ maternity and newborn care;

▪ mental health and substance use disorder services, including behavioral health treatment;

▪ prescription drugs;

▪ rehabilitative and habilitative services and devices;

▪ laboratory services;

▪ preventive and wellness services and chronic disease management;

▪ pediatric services, including oral and vision care

Employer mandate

2015Although firm

size determined

by FTE, penalty

is only assessed

on full-time

workers (30+

hours per week)

2016

See handout for

more details

Employer mandate

Details on the employer mandate from the Chamber of Commerce

Employer mandate

Determination and application of employer penalty by type of employee

Retrieved from http://www.fas.org/sgp/crs/misc/R41159.pdf 11/13/2013

What types of

incentives might

arise?

Employer mandate (less than 50 FTE)

Choices for “small employers”:

1. Are not penalized if do not offer point employees to individual exchanges (www.healthcare.gov)

2. Employers can buy health insurance from Small Business Health Options Program (SHOP) for 2015 (SHOP opens Nov. 2014)

▪ An online exchange (much like the exchange for individuals)

▪ Could quality for tax credits to offset costs (not permanent); can deduct remainder from taxes

▪ Way of attracting new employees increased total compensation?

3. Work with insurance company/broker to buy group coverage in private market (nothing new)

Employer mandate – more on SHOP

▪ Open to employers with 50 or fewer FTE employees

▪ In 2016 this will increase to those with 100 or fewer FTE employees

▪ Self-employed can use individual exchange, but not SHOP

▪ If offer through SHOP, must offer to all FT employees (30 or more hours per week)

▪ In many states, at least 70% of your eligible employees must enroll in your SHOP plan

▪ Employees sign up using the SHOP webpage after you have selected a plan

▪ Coverage will not take affect until approved by employer after enrollment period is over

Employer mandate

Group questions:

1. What do you think are the primary concerns for employers with respect to the employer mandate?

2. Have you observed any changes in your place of work?

3. Do you believe that your employer will be impacted by the employer mandate?

4. How do you think your employer will adapt to the employer mandate?

The economyWhat are the potential economic impacts of the legislation on the economy?

The economy

Labor market effects

Discuss labor

market issues

discussed handout

Current issuesWhat are the current issues being debated?

Current issues

Definition of full time work:

30 vs. 40 hours per week

Save American Workers Act 2015

HR 30 passed in January 2015

American Job Protection Act 2015

S 305 assigned to committee January 29, 2015 (2% chance of being enacted)

Group question:

7% of American workers work 30-34 hours per week while 44% work 40 hours per week.

What are the costs and consequences of redefining full time work under the ACA?

Thank you

Feel free to contact me –

Dr. Alice Louise Kassens

kassens@roanoke.edu

(540) 375-2428 (office)

@RnningEconomist

The PowerPoint presentation will be available on my blog:

www.therunningeconomist.blogspot.com