High Springs may face $61,000 health care increase

HIGH SPRINGS – Hearing of a potential $60,800 increase in employee health insurance premiums in 2014 may have led to sticker shock on the part of the High Springs City Commission at the June 13, 2013 commission meeting.

John P. White, Account Executive for Bouchard Insurance, the city’s health insurance broker, delivered the news and how the City of High Springs may be impacted when the Affordable Care Act (ACA) goes into effect in 2014. Commissioners invited White to the meeting to provide insight into the ramifications of the ACA in order to help them plan for impending changes to their employee health insurance costs during the 2014/2015 fiscal year.

The ACA will go into effect for most businesses in the first quarter of 2014, but the city will get a reprieve until the following year’s budget according to City Manager Ed Booth.

Municipal government budgets run Oct. 1 through the end of September of the following year. The City of High Springs will not be required to address all of these issues in final form until well into 2014.

Booth said, “I am happy to delay how the program will work for our city until some of the ambiguities of the ACA have been worked out. Other types of businesses will have to face these issues during the first quarter of the year. Hopefully by the time we have to take action, the ambiguities will have been worked out.”

The program limits the amount an employee can be required to pay based on their income level and number of hours worked. It stipulates the employer-sponsored plan must pay at least 60 percent of “the plan’s share of total allowed costs of benefits provided under the plan.”

Employer provided coverage is deemed “unaffordable” if a worker’s employee contribution does not meet a mandated “Safe Harbor” level.

As an example of a Federal Poverty Level Safe Harbor (2013) for a single individual, $90.96 is the most a City of High Springs employee can pay toward employee-only monthly premium.

White described the penalties for employers not offering insurance benefits according to ACA.

In 2014, the penalty assessed on employers that do not offer coverage to at least 95 percent of all full-time (minimum of 30 hours per week) employees and their dependent children will be $2,000 per year. Another penalty states that beginning in 2014, the affordability penalty assessed on employers for not offering an affordable plan in accordance with the established Safe Harbor methods will be $3,000 per employee on an annual basis.

According to White, “Under the ACA, premium subsidies are not available to individuals who are enrolled in or are eligible for coverage through their employer, as long as that coverage meets eligibility, affordability and minimum value standards. Additionally, premium subsidies are not available to employees earning more than 400 percent of the federal poverty level.”

The way in which premium subsidies will work remains unclear.

In order for the employer to be fined, the employee must receive a subsidy from the “Exchange” – federal or state. How this will work is also unclear.

Penalties can be enacted for companies considered to be large employers - an employer who has 50 or more full-time employees or full-time equivalents. The city presently has 46 full-time employees and seven full-time equivalents, putting them at 53 eligible employees and into the large employer bracket.

White estimated the employee only contribution (coverage for the employee only) would decrease from $155.71 to $90.96, while the employer contribution would increase from $290.91 to $355.66, based on the Federal poverty Safe Harbor amount of 9.5 percent of the employee’s salary.

Based on White’s calculations, this would lead to an increase in basic insurance rates for the city of $64.75 per employee or a total increase for the 2014/2015 fiscal year of $3,431.75, based on 53 employees.

For the purpose of discovering whether the city is or is not a large employer, White’s calculations indicate there are currently 33 employees enrolled in the city’s insurance plan. Additional employees, who are currently covered under a spouse’s insurance or through some other insurance plan, are also included for the purpose of determining large employer status and bring the total to 46 full-time employees.

The number of part-time employees equals an additional seven full-time equivalents, bringing the total up to 53, which exceeds the minimum of 50 employees in determining that the city is a large employer under the ACA guidelines.

Also based on White’s calculations, the city would pay $165,404 on their current health plan on the 33 employees enrolled today. With the change in the number of employees as of January 1, 2014, the cost will be $226,200 –– an increase of $60,796 or nearly 37 percent.

White indicated the employees could opt for a higher level of insurance, if they chose to do so, but would be responsible for the additional cost above the basic insurance plan offered by the city.

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