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By Autumn Parry / The Californian
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By Autumn Parry / The Californian
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By Autumn Parry / The Californian
BY RACHEL COOK Californian staff writer firstname.lastname@example.org
In the ever-changing landscape of health care reform, Bakersfield restaurateur Michael Guerra said he feels sorry for his employees, not so much himself.
Under the Affordable Care Act, businesses with 50 or more full-time workers will risk expensive penalties if they do not offer health insurance that meets particular criteria to employees.
WHAT ELSE TO WATCH FOR
Large employers have other Affordable Care Act-related requirements coming their way as well.
They need to watch for the fall launch of Covered California, the state's health benefits exchange, expert said. Employers must notify their employees about the exchange and how to access it by October, said Troy Burden, an insurance specialist for The Lynn Company.
Brandie Gasper, a health lawyer at the Klein DeNatale Goldner law firm, said employers may receive requests from the exchange to verify their workers' employment if their employees seek coverage through Covered California.
"Enrollment for the exchange starts in October so really it could be very soon that employers could begin receiving verification requests," she said.
Experts advised business people to consult with their health insurance broker, accountant and attorney about all the ins and outs of the rules and regulations.
But once employers understand what's going on under the hood of health care reform, it's not so scary, said Eric Barthel, health benefits consultant and senior vice president of HUB International, who works with clients throughout the Central Valley.
"It's not as bad as everybody's saying," he said. "The sky's not falling, we are not going to hell in a hand basket," he said. "Get really good advice and ask a lot of questions."
To learn more about how health care reform is impacting the local community, go to The Californian's Affordable Care Act web page at www.bakersfieldcalifornian.com/special-sections/affordable-care-act.
Guerra, controller of Mexicali Inc., which operates two popular restaurants, said the business has had to seek less attractive insurance options to offer its more than 100 employees because of rising insurance costs and a part of the federal health care reform law that says health insurance premiums can't cost workers more than 9.5 percent of their income.
"We had to go out and find a plan that we could offer to all our employees that's affordable and that has fairly decent coverage," he said. "My employees, I feel, are the ones that are going to take a hit, not us."
Guerra is one of the many business people in Kern County wondering how their companies and workers will cope with the so-called employer mandate.
Earlier this month, the Obama Administration delayed the employer requirement of the Affordable Care Act, so the penalties slated to begin in 2014 now won't take effect until 2015.
But while the delay provides some relief, there's still plenty of work for companies to do to get ready.
"Employers are standing on the sidelines and saying, 'OK, what's going to happen next?'" said Mike Daniel, chief operating officer of Today Cleaners.
Kern employers face different challenges depending on the makeup of their business, including how many hours their employees work and if their workers could be considered seasonal.
Some employers aren't sure how they will meet the law's requirements yet. Others are looking for insurance plans that could meet their needs and the law.
Under the law, full-time employees are counted as those who work 30 or more hours per week. However, insurance experts said employers also have to crunch how many hours their part-time employees work to accurately calculate their full-time "equivalent" workforce.
For the agriculture industry, one hurdle is "adjusting to this new idea of what a seasonal employee is, which is 120 days under the Affordable Care Act," said Bryan Little, director of labor affairs for the California Farm Bureau Federation.
At Sunridge Nurseries, many employees are seasonal and, according to Tom Bracken, chief financial officer, the business is limited on how much it can revamp schedules.
"You've got a farmworker shortage. Second of all, you've got to work within the constraints of what Mother Nature allows us," Bracken said. "There's no way that we can arrange things such that we can drop those workers to 30 hours or less."
Bracken said he originally thought it might be cheaper to pay the penalties, which will be triggered if an employee working for a company with 50 or more full-time workers seeks insurance through the state's health benefits exchange, Covered California, and gets a federal subsidy to purchase insurance. But those penalties could amount to roughly $600,000 for Sunridge and would not be tax-deductible, Bracken said. Providing insurance, on the other hand, would be in the neighborhood of $250,000, he said.
"At the end of the day, we would have had to add quite a number, as many as 50 people, to our health insurance" if the employer mandate took effect next year, Bracken said. "(The delay) allows us to plan a little bit more and perhaps structure our operations so we can minimize the effects of that cost."
Farmers and other business people also must consider how many employees work in all their various ventures.
Paul Sheldon, president and owner of Paul Sheldon Insurance and Benefits Planning, gave an example of one ag client with 35 employees in one group that also plans to open a service station in Kern County. The additional employees from the second business will bump that businessman over 50 full-time employees.
"The IRS won't let you split up your businesses and get away with (not) having to participate or be subject to the ACA mandates," Sheldon said.
Employers will be allowed a measurement period of up to 12 months to determine if an employee works full-time. But businesses and insurance advisors said keeping track will be costly.
"I am estimating one to two people extra that I will have to hire to my core team just to manage this," said Gloria Hernandez, president of Continental Labor and Staffing Resources.
Hernandez said her employer and the staffing industry as a whole face unique challenges.
The company, headquartered in Bakersfield with offices in Paso Robles, Visalia, Fresno and Ridgecrest, provides temporary employees to businesses and issues about 2,500 W-2s each year. The company's core staff of about 30 full-time workers are provided health benefits but Hernandez estimates the business is looking at offering health insurance to as many as six times that number of employees in the future based on how many workers will count as full-time after a one-year measurement period.
The cost to the business for all of the changes could be anywhere from hundreds of thousands to millions of dollars, she said. The amount fluctuates every time the cost is calculated with the latest proposed regulations, Hernandez said.
"The regulations are constantly changing. It makes it difficult for anybody to plan," she said.
Other businesses and insurance experts shared the same concerns.
"The biggest thing that we are hearing from our members is just the lack of information that is solid and consistent," said Cindy Pollard, president and CEO of the Greater Bakersfield Chamber of Commerce.
"(Employers) are having a difficult time understanding whether it applies to them, what applies to them, and what's going to be expected from them."
Some local health insurance experts said they've heard of employers cutting hours, but most said they're also seeing clients seek out insurance to offer their employees.
"You oftentimes hear a lot of criticism of the law but it's interesting to see ... it is increasing coverage for some individuals," said Brandie Gasper, a health law lawyer at the Klein DeNatale Goldner law firm.
"I've also seen employers that have decided or at least discussed the option of dropping hours."
Employers and benefit consultants questioned whether the employer mandate will actually lead to many more people having insurance. Little, with the California Farm Bureau Federation, said in the agriculture industry, workers often aren't interested in opting into benefits when employers offer them.
"You're required as an employer to offer it, your employees are not required to take it," Little said.
At the end of the day, insurance experts said, more than just money is at stake. Employers also have to consider how the moves they make to accommodate health care reform will affect their ability to attract and keep good workers.
"If an employer says, 'I'm not gonna get health insurance for my employees, I'll pay the penalty,' that will breed possibly a 'grass is greener' syndrome with the employees and cause them to jump ship and go with an employer across the street that is providing health insurance," Sheldon said.