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From Penalties to Tax Credits, Businesses Want the Facts About ACA

Some small companies at conference may provide employee insurance to compete for new hires.

sherise Ritter
Sherise Ritter of the Hamilton-based accounting firm The Mercadien Group speaks about the complexities of the Affordable Care Act.

One consequence of the 2010 Affordable Care Act is that small businesses, even those with fewer than 50 employees, may end up offering employer-subsidized health insurance. At a conference held in New Brunswick yesterday to explain the details of the new law -- which takes effect for businesses in 2015 -- some small companies said they might provide insurance to employees in order to compete for talent, even though they are not required by law to do so.

At the same time, there were plenty of business owners at the Mid-Jersey Chamber of Commerce healthcare conference who criticized the new law -- either because it was unnecessarily complicated or because it was forcing some of them to choose between paying for insurance or paying penalties in 2015. And few expressed confidence that they understood the necessary details behind the law to make an informed decision.

The provision of the law with the most impact on companies is the mandate that employers with at least 50 full-time workers (or the equivalent) provide health insurance or pay an annual penalty. Originally scheduled to go into effect at the same time as other major provisions of the ACA, this requirement was delayed by federal officials until January 1, 2015.

Regardless of what side of the 50-worker limit they're on, however, business of all sizes want to know what the law means to them.

Tom Kopp, owner of Hamilton-based Caring Senior Services, said he was actively weighing whether to provide insurance to his 24 employees, including two full-time workers and 22 part-timers. His company provides nonmedical home care to seniors, and he noted that insurance is an important attraction when competing with other firms for workers.

While the ACA doesn’t require him to provide insurance, “at the same time, I have competition out there who have to provide insurance coverage – they are much larger and have been around a lot longer,” Kopp said. “So we need to look at that on the recruiting side. And eventually I hope to grow large enough that I have provide healthcare anyway.”

Kopp said employers near the 50-worker threshold face a “terrible dilemma” about whether to cut the hours of workers. He said a friend who owns a similar business has been balancing whether to cut workers hours to avoid the mandate or concentrate on growing the business. “She may opt for the penalty instead of actually providing healthcare,” Kopp said.

Like Kopp, Jean-Pierre Geronimi of Princeton-based Global Trade Academy said his business is weighing whether to add insurance for its five full-time workers, mostly as a recruiting tool. The company provides training in international trade issues to business people.

“If we are to grow, we need a sustainable formula -- we need to look at what we could offer,” Geronimi said, adding that he wanted to know more about the small-business federal insurance marketplace, known as the Small Business Health Insurance Options Program, or SHOP. Neither the health plans nor the premiums that will be available through either SHOP or the individual marketplace have been released yet, although it is only 21 days until they launch.

“That’s a dilemma, because October 1 is around the corner and already there’s a lot of uncertainty around knowing what is possible,” Geronimi said. Since it is below the 50-employee threshold, Geronimi’s company won’t have to offer insurance in 2015. But he would like information about what will be available through the marketplace as soon as possible.

Geronimi, who is vice president of business development for the company, expressed surprise that another provision of the ACA provides tax credits to cover the cost of insurance for businesses with fewer than the equivalent of 25 full-time workers. Those tax credits already are in effect, with the maximum amount increasing from up to 35 percent of the cost of insurance to up to 50 percent on January 1.

Both Geronimi and Kopp -- who also wasn’t aware of the tax credits -- said they would talk with their accountants about the potential benefit.

“It’s something I want to dig into,” Geronimi said, adding that he was somewhat frustrated that he wasn’t aware of the tax credits more than three years after the ACA became law.

Representatives of Hamilton-based accounting firm The Mercadien Group led business owners in a two-hour presentation about the federal law and how it would affect businesses. Firm managing director Sherise D. Ritter noted that businesses have seen federal officials delay or adjust a series of regulations and mandates related to the law.

“It’s constantly changing and nobody can seem to put their finger on anything definite at this point, so they can’t plan appropriately,” Ritter said. “There’s so many layers to it.”

Douglas R. Forrester, chief executive officer of the healthcare benefits management company Integrity Health, called on employers to become more involved in the coverage they offer to workers.

Forrester, the event’s keynote speaker, said it was especially important for mid- to large-sized employers to demand increased transparency in their workers’ health costs, so they can measure whether the care their workers receive is effective and offer health programs tailored to their employees. He noted this might not be possible for smaller businesses, where it is difficult to provide employers with employee health costs without violating worker privacy.

MidJersey Chamber President Robert Prunetti agreed that business owners should be taking an active role in healthcare, adding that the impending launch of the ACA provisions has prompted many questions from his members.

“They’re somewhat confused, so they need more information about it,” Prunetti said of the ACA. “They’re not sure how it applies, when it applies, who it applies to, because we’re getting, not necessarily mixed messages, but a lot of messages from the federal government -- and the state government, by the way.”

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