WASHINGTONGoing on five years after the passage of the Affordable Care Act (ACA), tire dealers and other small business owners still feel they're being ambushed by what many call Obamacare and are uncertain how exactly it will affect them.
Jim Melvin Jr., president of the Johnston, R.I.-based tire dealership chain Melvin's Tire Pros, is typical of U.S. tire dealers in trying to provide decent healthcare insurance to his employees while staying in full compliance with the law.
I sit down every year with my human relations director and my insurance man to figure out our healthcare plans for the coming year, Mr. Melvin told Tire Business. The problem is, no one can really tell us how the Affordable Care Act is going to affect us.
Meanwhile, Mr. Melvin said, his company's health insurance premiums have had stiff annual cost increases for the past several years. We do everything we can to make sure all our employees have coverage, he said. Usually, that means raising the deductibles.
Mr. Melvin said he would hold a meeting with employees on health insurance sometime between Nov. 10 and Nov. 15.
Roy Littlefield, executive vice president of the Tire Industry Association (TIA), said most if not all TIA members are facing the same quandaries.
I'm getting calls from members every day, Mr. Littlefield acknowledged.
They're reporting 20- to 100-percent increases in their health insurance premiums.
A recent Wall Street Journal article described the efforts of employers with 100 or more employees to avoid the penalties mandated in the new Employer Shared Responsibility Provisions of the ACA that go into effect Jan. 1, 2015.
Under the Employer Shared Responsibility Provisions, employers with more than 100 full-time employeesthat is, those working 30 hours a week or moreand who do not offer affordable health insurance to those employees and their dependents, may be required to pay a penalty of up to $2,000 for each employee certified to receive premium tax credits in the individual health insurance marketplace.
For employers with 50 to 99 employees, these provisions are delayed until 2016 as long as they meet certain certification requirements, according to a TIA synopsis of the rule.
According to the Journal article, thousands of employers at the 100-or-more threshold are using any means necessary to circumvent the penalties under the new employer provisions. Some are switching full-time employees to Medicaid, it said, while others are offering skinny health insurance plans that severely limit benefits, but not payouts.
About half of TIA member dealerships meet the 100-employee threshold, according to Mr. Littlefield. But he told Tire Business he did not know of any that were opting for either Medicaid or bare-bones health plans. Nor are they using the now-common subterfuge of cutting workers' hours to 28 or 29 hours weekly, he added.
This is because tire dealers place a very high priority on training and educating their employees, then making sure they stay on for the long term, Mr. Littlefield said.
Our industry tends to insure its employees more than any other small business industry. If you want to keep your people, you've got to offer them benefits. If all industries had done what our industry does, we wouldn't be in this mess.
The problems associated with ACA provisions aren't limited to TIA's larger member companies, according to Mr. Littlefield.
For example, under the ACA, employers with fewer than 25 employees may opt out of providing health insurance for their workers, allowing them to buy insurance individually through state insurance exchanges instead. But if they offer health insurance, the business owners must offer the same policies to their employees that they purchase for themselves.
Mr. Littlefield said he recently received a call from the owner of a small tire store. He asked me, 'What do I do?' he said.
The tire dealer had always offered health insurance to his employees, Mr. Littlefield said. He wanted to continue offering health insurance, but with the steep rate increases in recent years, he had been forced to start offering insurance coverage to his employees that was less than what he bought for himself and his family.
If he continued offering less coverage to his employees, he would face stiff penalties, Mr. Littlefield said. If he offered his employees full coverage, it would bankrupt him. But if he just stopped offering insurance to his employees, he'd be OK. That's the sort of thing you see all the time with the ACA.
TIA offers its own self-funded group health benefits package through National General Benefits Solutions, in an effort to keep TIA members' health insurance costs down in the face of ACA-related increases.
Among other things, the TIA plan offers:
c A choice between Aetna Inc. and Cigna Corp. as an insurance carrier;
c Pricing advantages and plan flexibility unavailable in a fully-funded insurance program;
c The ability to earn credit toward future premiums in favorable claim years; and
c Transparent, detailed benefits reporting to help policyholders manage their healthcare costs.
Meanwhile, the Internal Revenue Service has a question-and-answer page on the Employer Shared Responsibility Provisions of the ACA. It can be found on the IRS website at www.irs.gov. Search on the Affordable Care Act.
To reach this reporter: [email protected] crain.com.