30 days later, health reform still misunderstood
April 23, 2010
The unique employment scenarios in Park City have many businesses confused as to what federal health care reform will mean to them.
On April 22, the Park City Chamber/Bureau hosted a special event for members featuring Jeff Kluge, a senior consultant with GBS Benefits, Inc who explained some of the changes.
Yet, many are still in the dark as to how the changes will impact seasonal employers.
For example, only companies with over 51 employees will be required to provide coverage or vouchers for coverage. Companies with less than 25 employees can qualify for significant tax credits to help pay for employee plans.
Many businesses in Park City have fluctuating ranks depending on the season. They are unsure how many qualify under the new rules.
Chamber/Bureau President and CEO Bill Malone said he heard seasonal businesses get certain exemptions, but only for people they employ less than 120 days. Park City’s ski seasons average 145 days.
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If he heard correctly, Malone said the resorts could consider shortening their season if savings under the new rules exceed profits gained those three weeks.
Kluge said he didn’t know the answer, but sympathized with the confusion since many fine details concerning other aspects of the reform aren’t even worked out yet. The two bills Congress passed in March frequently outlined policies that will be written by certain agencies by particular deadlines. That means the full implications of some of the reforms can’t be known yet.
Nor is it clear that all the parts of the bills that have been finalized will have the desired results. For example, it has become so expensive to provide insurance for an aging worker or an employee with a large family that it will likely be cheaper for some to deny coverage and pay the $2,000 fine. Some of the mandates for individual coverage likewise impose such minimal fines they may be ignored, Kluge said.
Also, states are required to set up insurance exchanges in the coming years. Utah is "ahead of the curve" with its Utah Health Exchange, but the program has problems, he said.
It’s set up to offer more choices to consumers; it has the potential to give residents 50 different plans to choose from. But most people struggle with understanding the industry jargon and have great difficulty knowing what kind of coverage is best for them. Sometimes fewer choices are better, he said.
What is clear is that many of the changes will likely cost individuals and businesses more money, he said.
Individuals making less than $90,000 can apply for help to buy insurance. That’s most Americans, he said, and the assistance would be funded with taxes. Employers will also be required to report health benefits on W-2 forms. Even though those expenses are supposed to be tax-free, the government rarely asks for information on those forms it doesn’t plan to tax, he said.
And while it’s good news that insurance companies won’t be able to deny people with pre-existing conditions, that policy will make coverage more expensive, Kluge said.
He has asthma a preexisting condition that, although minor, makes him ineligible for many plans, he said. His medication costs $5,000 every year and even though he’s healthy otherwise, he brings that burden to whatever plan he joins.
"All these mandates we’re adding are going to make it hard to keep costs down," he said.
The federal government has argued that forcing more people into insurance plans should spread the risk and the cost. Kluge said that may lower costs eventually, but rising taxes and rising premiums are likely in the short term.
Requirements for employers to report information to the government and employees has become more complicated as well. That’s likely to tax human resource departments already overwhelmed by the changes, he explained.
Sharon Kellner with Gemstone Hotels & Resorts said her company manages hotels in other states. They don’t all have the same plans or schedule for renewals, so she performs tasks every few months that other people in her professional only do yearly.
Rebecca Crandall with Snowflower Property Management said the process is already so complicated she’s beginning now to prepare for a deadline six months away. Both said they’re overwhelmed by the work the changes may create and are worried about the extra expenses their employers may have to pay.
"We want the benefits of reform, but can we afford them?" Crandall asked.
"I don’t know exactly where they’re going or how they plan on going there," Kellner said. "How do you cover everybody without charging a whole lot more? It’s a behemoth."
Crandall had another concern echoed by many attendees at the meeting. As the new policies become better understood, it appears young and healthy people will no longer be allowed special breaks on insurance costs. Instead, they’ll be required to help subsidize coverage for the ill.
"It’s like a penalty for those who are healthy," Crandall said.