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  • Health Care Reform: Painting the Plane While in Flight

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    By Bill Eicher
    GNW-Evergreen Insurance Services


    Is it me, or does the unfolding of the PPACA (Health Care Reform) feel like the plane crash scene in the movie FLIGHT? Terrifying, surreal, yet however it looks like we will make it through with only a few deaths and major injuries (and no I am not insinuating Obama has an alcohol and cocaine habit).


    There are a few aspects of the PPACA that are impactful and almost unavoidable:


    1. Large employers of 50 or more full time employees WILL need to offer qualified health care coverage for their full time employees or they will pay a penalty.
    2. Large employers that already offer a benefit plan SHOULD start planning now to ensure compliance in 2014.
    3. Individuals (not covered by an employer sponsored plan) and small employers will have a significant number of new options available in January of 2014 .


    Today I would like to focus on large employers that are not currently offering any health benefits.


    In general, employers with 50 or more full time (30 hours / week) employees will be required to offer qualified coverage at an affordable level or pay a penalty. The annual penalty for not offering qualified health care coverage will be: number of full time employees minus 30 employees times $2000.


    So lets take a 230 employee home health care provider that does not offer health benefits. Their 2014 tax / penalty will be: 230 EEs - 30 EEs = 200 EEs X $2000 = $400,000.


    $400,000 is a big number. Assuming a 10% net profit margin that will require an additional $4,000,000 in sales revenue to break even. Given an average billed rate of $25 / hour, you will only need to bill an additional 160,000 extra hours in 2014. Let's break this down so it is not so scary. 160,000 hours / 52 weeks = 3,077 hours a week. If an average client is 50 hours per week you ONLY need to have 62 new clients in the hopper for January 1, 2014.


    So needless to say there are huge changes facing employers over the next 8 months. In the second and third parts of this blog series we will specifically discuss strategies and tactics for addressing the requirements for Health Care Reform.

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