Dec 19, 2013
Farmers should explore insurance options now

Health care reform is having an impact on all areas of commerce. Agricultural interests are finding themselves directly in the mix of the sweeping new legislation.

Adam Kantrovich, Michigan State University farm management educator, urged farm operators to take time now to get a handle on the federal Affordable Care Act (ACA), also known as Obamacare, so there are fewer surprises when the employer mandate portion of the law takes hold in January 2015.

Speaking at a workshop on the ACA in West Olive, Mich., in late October, Kantrovich said the enormity of the controversial law requires diligent study and decision-making on the part of all employers and employees throughout the country.

“This bill, like it or not, is one of the most well-written pieces of legislation this country has ever seen,” Kantrovich said. “There is no pork-barreling, no loopholes, no exemptions, exceptions or otherwise. It’s one of the tightest bills that’s ever been written.”

With the direct oversight of three federal agencies – the Internal Revenue Service, Health and Human Resources and the Department of Labor, “this thing is pretty massive,” he said.

“The ACA applies to all employers,” he stressed. “Agricultural employers are included in all of the provisions. As farmers, we have a tendency to wait until the very last minute, especially when it comes to regulation. You can’t do that with this bill.”

Before establishing new approaches, however, Kantrovich urged farm operators to work with their tax, legal and insurance advisers.

“This is not going to be easy,” he said. “You’re going to change some of the ways you do things so you can have easy access to the numbers you need to figure this stuff out.”

Kantrovich said he has met with several farms to see where they fall within this act.

“I met with a berry farmer and a vegetable farmer who are phenomenal record keepers,” he said. “For the vegetable farm, it took more than three and a half days to pull out the necessary data for us to begin to do the calculations. This is something we cannot wait on. You may, after looking at this, have to make some decisions and change some things administratively dealing with your labor, so you can easily pull out the information necessary to do your reporting.”

Kantrovich suspects that the biggest reason the employer mandate was pushed back a year – while the individual mandate was left in place to start in 2014 – was to iron out problems with the initial employer reporting system, which might not be put in place for another nine months or so.

“They had a reporting mechanism in place, but the feedback they received, especially from small business, is it was way too complicated and time consuming. They pulled it back and are starting from scratch on setting up a reporting system.”

The delay in the employer mandate/recordkeeping provisions means they are not required for 2014, but will kick in for 2015. All employers did have a mandate to provide information about their health care benefits and about the insurance marketplace by Oct. 1.

ACA’s employer shared-responsibility provision states that employers employing less than 50 full-time or full-time-equivalent workers will not be required to offer health insurance to their full-time employees.

Employers employing a total of 50 or more full-time or full-time-equivalent employees must be prepared to offer “affordable health care coverage that provides a minimum level of coverage” to full-time employees, or pay an Employer Shares Responsibility payment.

Full-time employees should be counted if they have at least 30 hours of service per week (or 130 hours a month). The number of full-time-equivalent employees (FTE) is calculated by taking the total hours worked by all part-time employees (under 30 hours a week) during the month and dividing that by 120.

The following workers are not counted in an employer’s number of employees under ACA: Those provided by a staffing agency (leased employees), and those typically provided a 1099 (contractors).

If a business has less than 50 employees, it is not required to offer health insurance to any employees. If the total is more than 50, health insurance must be offered to full-time workers.

Seasonal employees, who are generally exempt from receiving employer insurance under ACA, present the category most likely to pose calculation challenges for farm operators, Kantrovich acknowledged.

Seasonal employees are those who do not work more than 120 days a year. The employee performs labor/services on a seasonal basis as defined by the Department of Labor.

“Exempted seasonal employees are not included in the employers’ number of employees,” Kantrovich said. “Our employee level is not flat across the year, especially when we’re dealing with fruits and vegetables. We don’t have a single peak – we have several peaks and valleys. You actually have to consider all these points in regard to that to come up with the monthly worker average.

“A general rule of thumb is to reconfigure in your mind what a full-time worker is,” he said. “Start thinking in FTEs, which redefines what a full-time person is in this act. It’s not someone who works 40 hours a week. It’s someone who provides 30 hours of service.”

For employers who are required to provide health insurance under ACA, the insurance must not cost the employee more than 9.5 percent of his or her household income/W-2 wages.

A minimum level of coverage must include all “Essential Health Benefits,” including: ambulatory services, hospitalization, prescription drugs, mental health and substance abuse services, rehabilitative services and devices, preventative and wellness services and chronic disease management, pediatric services including oral and vision (until age 19), emergency services, maternity and newborn care and laboratory services.

Kantrovich said all employers should base decisions on labor usage on the total picture – not just health care.

“If you cut hours to part time, can you really find additional employees?” he wondered. “If you eliminate health care for employees, will your competitors in the labor market do so?”

Gary Pullano


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