What Kentucky businesses need to know about the Affordable Care Act

Margaret Levi, a lawyer with the ­Lexington firm of Wyatt, Tarrant & Combs, is the author of The Impact of Health Care Reform on Kentucky ­Employers, a 68-page booklet published by the Kentucky Chamber of Commerce.

Levi’s clients include hospitals, ­medical device manufacturers, nursing homes, ­physicians, home health agencies and ­other health care providers. She is a ­member of the American Health Lawyers Association and Kentucky Academy of Health Care Attorneys, and a former chair of the state association’s Health Law Section.

The new law is, to say the least, ­controversial. Opponents are waging a fierce battle, not only in ­Congress but through media, to derail its ­implementation. Levi’s book basically says, “Here are the rules, here’s what implementation means. We’re leaving politics at the door.” And it is that neutral “Just the Facts” perspective that we are interested in.

Tom Martin: As significant legislation goes throughout American history, how do you feel this compares?

Margaret Levi: It’s really some of the most far sweeping changes in health care. They’ve tried to increase quality, expand health care coverage and control rising costs.

Martin: Your book is aimed at ­Kentucky employers who are trying to comprehend this law. What are the most ­significant ways the ­Affordable Care Act is impacting those employers?

Levi: Beginning in 2015, the employers, large employers, are going to have to purchase insurance for their employees. This is called the “employer mandate.”

Some people call it the “play or pay mandate” because employers are either going to have to play in the insurance market or pay a penalty. So the large employers need to start looking now to see how it’s going to affect them when it goes into effect.

Martin: What are the most difficult challenges in the short term?

Levi: In the short term, it will be to do the calculation to see whether or not it’s more efficient to pay the penalty or provide the coverage for their employees. And you can’t factor in only that. You have to look at employee satisfaction, as well. If you don’t offer insurance, will you lose employees?

Martin: We often hear that this is going to hurt for a lot of small businesses. Is that a reasonable fear?

Levi: For businesses that have 50 or fewer full-time employees there’s no effect at all. They are not required to provide insurance. It’s the larger employers that this is really going to impact. That is defined as someone who employs 50 or more full-time employees, and a full-time employee is someone who works 30 hours or more a week. That’s not usually how we think of a full-time employee. We usually think of 40 hours. Some companies define full time as 37.50 hours, some is 35. So thinking as full time being 30 hours is a different mind-set. And then, once you figure out whether you have 50 or more full-time employees, you have to look at providing coverage that is affordable for the employees and meets acceptable levels of coverage.

Martin: Would you agree that there’s an awful lot of confusion surrounding this law?

Levi: There is. Even the people who have read the law have some confusion over it. But it’s a huge law. There’re a lot of details. I hear a lot of people object to the original mandate, which is the requirement for individuals to purchase health care insurance. However, if you ask individuals if they want health care insurance, they would say they do.

Martin: What are some misunderstandings or unrealistic expectations that you’ve heard?

Levi: A misconception I’ve heard is that it will be providing free health insurance to everyone. And that’s not true. It just requires everyone to play in the insurance market if they are able to, financially. I’ve heard that it’s providing free health care to illegal aliens, and that’s not true. And I’ve heard that all employers have to provide insurance, and that’s not true. It’s just those larger employers.

Martin: What happens to those employers who do not provide insurance?

Levi: There are two different types of penalties. There is a penalty if they fail to cover insurance. If they offer no health care insurance they’re going to pay a penalty equal to $2,000 per year, per employee after the first 30 employees. If they offer some coverage but it’s inadequate — for example, they do not pay 60 percent of the total allowed cost under the plan — or if an employee’s required contribution is more than 9 percent of the employee’s household income, then there is a penalty of $3,000 per year for every employee who opts out of the plan and then goes to get government subsidized coverage under a health care exchange.

Martin: An immediate goal of the Obama administration’s implementation of the ACA is to persuade some 48 million uninsured Americans to sign up for coverage on these new exchanges that are created by the law to offer new coverage options for individuals and small businesses. Kentucky has established an exchange. Can you tell us briefly how it works?

Levi: Well, it’s an online marketplace where individuals can go and look for coverage. It’s kind of like Travelocity for insurance. You can compare plans that meet your goals. Kentucky’s marketplace is designed to tell someone whether they qualify for Medicaid first, in which case they wouldn’t have to go and purchase insurance, they would have to get Medicaid coverage. Medicaid has been increased this year to cover individuals up to 138 percent of the federal poverty level. So, they first make a decision whether they qualify for Medicaid. If they don’t then they would look to see if they qualify to purchase insurance through the exchange. And there are subsidies for individuals who make income up to 400 percent of the federal poverty level.

Martin: You’ve done some speaking and appeared on forums about the ACA, and in your practice you hear from employers who are looking for guidance. What are some of the more interesting questions that have come your way?

Levi: A lot of the questions have to do with the details. They’ll say we have to provide coverage, is it for children up to age 26 or is it through age 26? There are questions about the details. How will this work?

Martin: What is the answer to that question, by the way?

Levi: Up to age 26 ... . You don’t have to provide coverage for temporary or seasonal employees even if you’re a large employer and you have to provide for your full-time employees. How do you calculate and determine who is seasonal or who is a temporary employee? It’s a tricky question. Another question we get is what to do with variable-hour employees. They may work 20 hours one week and 40 hours next. How do you determine whether they will be full-time, more than 30 hours? What you have to do with that is a “look-back” period. You can set your look-back period for three months, six months, a year and then figure out going forward whether they’ve met that 30-hour threshold. But once you do you’re locked in that for the next period.

Martin: So, even though much of the law is being rolled out in October, there are some provisions that are not hitting us right away and there is time to absorb them and understand them better?

Levi: Yes, there is. There is a little bit of a breathing room. There’s time now for individuals to figure out their coverage for this next coming year. Open enrollment season started Oct. 1 for many employers. Open enrollment on exchanges runs from Oct. 1 to March of next year. So individuals and even small businesses can take a look at the exchanges to see if they can purchase insurance for their employees. Employers now have another year to figure out whether they have to provide insurance. Many already do, but there’s no penalty right now if they fail to. Next year, there may be penalties involved. So my advice would be to pretend that the Affordable Care Act is in place right now and try to comply with it.

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