|By Starrla Cray, Staff Writer
What does the Affordable Care Act (ACA) mean for business?
It depends on the size and type of the company in question.
“For a lot of employers, health insurance is one of their biggest fixed costs,” said Brad Felknor of Felknor & Associates in Delano.
Those with 50 or more full-time employees (defined as working 30 hours or more per week) must provide acceptable-levels of insurance to staff in 2014. If they don’t, and a worker turns to the ACA for a tax credit or subsidy, the company will have to pay a fine.
For calculation purposes, two part-time employees can add up to one “full-time equivalent.” For example, a company with 40 employees each working 30 hours per week, and 20 employees each working 15 hours per week, would be equivalent to a company with 50 full-time employees.
Small businesses (under 50 employees) aren’t required to offer coverage. However, certain businesses may have an incentive to do so. Those with fewer than 25 full-time equivalent employees that contribute at least 50 percent to the employee’s premium, and that pay average annual wages below $50,000 per person, are eligible for a tax credit. Owners are excluded, and don’t count in the number of employees or wage amounts.
For example, according to the tax credit calculator on MNsure’s website (mn.gov), a business with 10 full-time employees each making $30,000 would get a tax credit of $4,000 per year if the employer contributes a total of $10,000 to annual premiums.
Small businesses and individuals may use MNsure to purchase health insurance. (Sole proprietors count as individuals.)
Plans are available at four coverage levels. Bronze covers about 60 percent of the costs of services it offers, silver covers about 70 percent, gold covers about 80 percent, and platinum covers about 90 percent. A “catastrophic plan” will also be available.
The overall cost
About $1 trillion in new tax revenues are associated with the enactment of the Affordable Care Act, according to The Fiscal Times.
The article gives the following breakdown of major predicted revenue sources for the ACA, as follows:
• Penalty payments by people who are uninsured and employers who don’t provide coverage $161 billion
• New Medicare tax $318 billion
• Excise tax on high-premium insurance plans $111 billion
• Fees on insurers and third-party administrators $184 billion
• Taxes and fees on certain health industry manufacturers and insurers $165 billion
• Other revenue provisions $87 billion
Health care in Minnesota
If your business is manufacturing medical devices, you will face a 2.3 percent excise tax based on the total revenues of your company, regardless of whether the company generates a profit, according to the Medical Device Manufacturers Association.
The tax is predicted to raise $3.2 billion dollars each year on average, for the next 10 years, taxfoundation.org reported. The site states that the new tax could have repercussions, such as higher prices on medical devices, and an adverse affect on innovation, employment, and competition.
According to a March 22 CBS article, Minnesota has more than 400 medical device companies, and the industry employs about 30,000 people in the state.
“We’re going to pay a disproportionate amount of tax,” Felknor said, adding that he’s not sure what benefit Minnesota is getting from the ACA.
Other publicly-funded health insurance programs available to Minnesota residents include MinnesotaCare, Medical Assistance (MA), and Medicare.
In addition, people in Minnesota have had access to insurance through the Minnesota Comprehensive Health Association (MCHA) since the late 1970s. This type of coverage is a safety net designed for individuals who have been turned down for health insurance in the private market. The MCHA is a non-profit regulated by the Minnesota Department of Commerce, and currently serves about 26,000 Minnesota residents.
According to Felknor, the biggest reason he sees for people not getting health insurance is cost, not availability.
“What we really need is cost reform,” he said. “Insurance should only be to insulate against risks you can’t assume yourself.”