Roberta Riportella, Ph.D. Kansas Health Foundation Professor of Community Health

College of Human Ecology Kansas State University

K-State Research and Extension

Professor Emerita University of Wisconsin-Madison

Prepared by Barbara O’Neill, Rutgers University, and Roberta Riportella, Kansas State University With assistance from Heidi Johnson University of Wisconsin-Extension agent, Nadine Sigle, Kansas Research and Extension agent, and Katie Breese, Kansas State University graduate assistant

At the End of the Session, You Will Have a Better Understanding of...

�  How the ACA works for farmers/ranchers, their families and farm/ranch workers

�  What your roles and responsibilities are

�  The choices you will have to make and

�  The timeline in which you will have to make those choices

Two Affordable Care Act impacts on farm/ranch families:

�  As consumers who will be making health care decisions for their families

�  As employers of workers

¡  Migrant workers (travel frequently between job sites)

¡  Seasonal farm workers (local temporary labor force)

¡  Year-round farm workers

Farm/Ranch Families and Health Care

�  Farmers/ranchers are more likely than the U.S. population as a whole to have health insurance

�  Farm work is hazardous; many occupational injuries (Have insurance to “protect the farm”)

�  Many had relied on individual policies (36% vs. 5% of all Americans)

¡  Few group options previously

¡  May use a high-deductible policy paired with a HSA

�  The Marketplaces (Exchanges) may offer new insurance options that could result in lower premiums because it will no longer be legal to charge anyone (including farmers) for any pre-existing condition or risks associated with a higher risk occupation (such as farming)

Farm/Ranch Families and Health Care

� Requiring insurance companies to take all seeking insurance

o  No more exclusions for consumers who have pre-existing conditions (already in place for children under 19, for all ages began Jan 1, 2014)

o  No more cancellation of policies for someone being too sick

o  No more lifetime maximums on the amount paid for care for essential benefits

o  No more annual maximums on the amount paid for care for essential benefits

ACA Goal: Decreasing the Number of Uninsured Americans

Ambulatory patient services Maternity and newborn care

Emergency services Prescription drugs

Mental health and substance use disorder services

Laboratory services

Rehabilitative and habilitative services and devices

Chronic disease management

Preventive and wellness services

Pediatric services, including oral and vision care

Essential Health Benefits

� Consumers are mandated to purchase insurance

� Creates Marketplaces (Exchanges) where consumers can choose among affordable plans, offering tax credits to some

� Builds on current employer-employee fringe benefit insurance arrangement and mandates large employers to offer adequate and affordable plans

� Intended to expand states’ Medicaid programs to include all individuals and families under 138% FPL ($15,856 for individual, $32,499 for family of four)

ACA Goal: Decreasing the Number of Uninsured Americans (Continued)

�  As of March 31, 2014, Americans were required to be enrolled in a health insurance plan with essential health benefits

�  With few exceptions, if you are not insured, and your income is over 138% of the FPL ($15,856 for an individual; $32,499 for family of four) you will be required to pay a penalty.

�  Penalty for no coverage will rise from $95 for adults or 1% of family income, whichever is greater (2014), to $695 or 2.5% of family income… (2016) http://kff.org/infographic/the-requirement-to-buy-coverage-under-the-affordable-care-act/

ACA Provisions for Consumers: Individual Mandate

� Children are also required to be insured. May be through ¡ Public insurance (e.g. state’s Children’s Health

Insurance Program) or CHIP or

¡ Parents’ obligations (employer or through private purchase) Fines for uninsured children are half that of the adults up to a family maximum of $285 for 2014.

� The tax will be assessed on federal income tax return ¡ May need to adjust estimated payments and/or W-4

ACA Provisions for Consumers: Individual Mandate (Continued)

�  76% taxpayers 2014 checked box saying insured (81% considering dependents)

�  7.5M paid $1.5B in “individual shared responsibility payments” ¡  Avg payment $200 ¡  40% <$100, 95% <$500 ¡  85% still had refund ¡  300,000 of these should have claimed exemption

�  12M claimed exemption

http://www.irs.gov/PUP/aca/CommissionerLetter.%20ACA%20Datapdf.pdf

First Year’s Experience with Tax Penalties

�  Lowest income residents (< 138% of FPL) will be enrolled in Medicaid (legal residents only) in expansion states

�  Higher income workers can get coverage through

¡  Medicare (age 65+)

¡  Large employers (farm or off-farm employer)

¡  State health insurance marketplaces (see www.healthcare.gov)

¡  Private market (e.g., insurance brokers, health co-ops)

More ACA Consumer Provisions

 

   

•  Marketplaces  are  managed  either  by  the  state  or  federal  government  

•  People  can  get  help  applying:  o  h:ps://localhelp.healthcare.gov/    

•  2016  Open  enrollment  period:  11/1/15-­‐  1/31/16  

•  Qualifying  life  events  are  reasons  for  enrolling  out  of  usual  schedule  (special  enrollment)  

h:ps://www.healthcare.gov/marketplace-­‐deadlines/2015/    

   

Health Insurance Marketplace

Different Levels of Plans •  4 Levels of Coverage – Bronze, Silver, Gold, and Platinum

o  Each has a different value for level of coverage o  Bronze: 60%. Silver: 70%. Gold: 80%. Platinum: 90%

(adequacy values, how much plan vs. insured pays) o  Any costs not covered by the plan are paid by individuals

through deductibles, co-pays, co-insurance (not including monthly premium)

•  Each plan level must cover the same set of minimum essential health benefits o  What differs is amount of cost-sharing required o  Example: The bronze plan will have the least generous

coverage (60%) with more out-of-pocket costs

•  No health plan can apply a deductible or any cost-sharing for certain preventive health services

•  If you qualify the government can help pay some of: •  Your premiums:

o  Advanced Premium Tax Credit •  Your out of pocket expenses:

o  Cost Share Reduction

Some People Get Assistance in Paying Insurance Related Costs

Health Insurance Subsidies Two provisions to lower health insurance premiums and out-of-pocket costs for LMI households

•  Premium Tax Credits- Help people pay monthly cost of having a Marketplace plan; based on family size and household income from 100% (138%) to 400% of FPL

•  Cost-Sharing Reductions- Decrease the charges that people having a Marketplace plan must pay OOP for deductibles, copayments, and coinsurance; must have income up to 250% of FPL and be enrolled in a Silver plan

�  Assistance is dependent on income in relation to the federal poverty level

•  Determined by:

o  Number of people in family/household

o  Your modified adjusted gross income

o  Your income minus some allowable reductions

How is Eligibility for Financial Assistance Determined?

Source:http://www.cbpp.org/cms/?fa=view&id=3190

•  But MAGI must be estimated for the coming year! •  Difficult for farmers/ranchers with fluctuating income •  You can choose to wait until tax time to get the correct amount

of tax credit due you but if you are eligible for one or both subsidies o  You would miss out on cost sharing reduction altogether o  You’ll be paying lots in premiums upfront

•  If MAGI is overestimated o  You will get less than you are entitled to upfront BUT o  You’ll get the balance at tax time

•  IF MAGI is underestimated o  You get more assistance than you are entitled to AND o  You’ll have to pay back some of that overage at tax time.  

Modified Adjusted Gross Income is the basis for determining subsidies

• 2014 tax year (April 2015) first year we see how this works • Need to check off a line that you were insured for the full year. If not, other steps. • Some will see fines…those who were not exempted from mandate and were not insured for at least 9 months in 2014 • Those who initially qualified as subsidy eligible

• Some will have to payback some of their subsidies • Some will get a credit because they were shorted on their qualified subsidies

Tax Implications: Reconciliation Time

Caps on Subsidy Repayments

FPL Individual Family

<200% $300 $600

200-300% $750 $1500

300-400% $1250 $2500

�  2.7 M (of 4.5M who claimed approximately $9B in PTC) filed (360,000 on extensions) ¡  Avg credit $3400 ¡  40% $2000-$5000 ¡  20% >$5000

�  1.3M, 40%, claimed a net PTC (didn’t get enough) ¡  65% were due <$500, 80% <$1000 ¡  Avg due $600

�  1.6M, 50%, claimed excess PTC (got too much) ¡  50% owe <$500, 75% < $1000 ¡  Avg repaid $800 (still had net refund)

http://www.irs.gov/PUP/aca/CommissionerLetter.%20ACA%20Datapdf.pdf

First Year’s Experience with Tax Credits

�  Some families with incomes low enough to qualify for Medicaid or tax subsidies have a high net worth (median net worth of farmers is 5x U.S. median net worth)

�  The ACA does NOT have an asset test; only income and family size are considered

�  Lack of an asset test is a significant advantage for farm families with low cash incomes

�  Farmers often have flexibility to manage taxable income (i.e., timing receipt of income and capital expenses)

�  Farmers may qualify for benefits that were previously only available to low income/low asset households

ACA Benefits for Farm Families as Consumers

24  

�  If you didn’t purchase health insurance for 2015: ¡  Consider how a penalty may affect your 2015 tax liability ¡  Consider if you want to avoid the penalty and purchase insurance for

2016 BEFORE JAN 31, 2016 DEADLINE for Marketplace, must have plan by April 1 to avoid penalty 2016 tax year

�  Each year ¡  Consider if you want to keep the current plan you have. ¡  If you purchased through the Health Insurance Marketplace you may

have some redetermination procedures. ÷ You would have received a notification about this. ÷ Pay close attention because you may be automatically

enrolled in the same plan OR you may not be and you have to do something to get enrolled again.

Action Steps for Families

What Does the ACA Mean for Farm and Ranch Owners as

Employers?

�  Sole proprietors are considered “individuals” and are subject to ACA individual mandate

�  Can shop for coverage for farmer/rancher/family on state Exchanges or privately

�  Compare cost of current individual policy (if any) to policies available on state Exchanges

¡  May have cost savings vs. policies offered in private market

Sole Proprietorships

�  American Farm Bureau: “The vast majority [of farm owners] likely won’t have to offer insurance”

�  Department of Health and Human Services: “96% of all businesses will be exempt from the law”

�  Only 0.2% of U.S. businesses with 50+ employees do not provide health insurance to FT employees

�  Resources: http://buffalo.ynn.com/content/653580/how-the-affordable-care-act-could-

impact-farmers/

http://www.forbes.com/sites/theyec/2013/04/22/is-the-affordable-care-act-really-bad-for-business/

ACA Employer Provisions

�  Small employers (< 50 FTE) are not mandated to offer health insurance to full-time employees

¡  But their workers may be mandated to purchase coverage and may likely do so with subsidies in the Marketplace

�  If employers offer insurance, must be offered equally to everyone

�  SHOP (Small Business Health Option Program) Exchange available for small employers

�  For 2015, SHOP Marketplace is open to employers with 50 or fewer full-time equivalent employees (FTEs). By 2016, those with 100 or fewer FTEs can use the SHOP

�  90 day waiting periods are allowable for new employees

ACA Employer Provisions

Are you small enough?

�  Exclude the following people entirely from your calculation of hours worked ¡  The owner(s) ¡  Family members or dependents living in their household ¡  Ministers considered by the common law tests to be self-

employed ¡  Seasonal employees who work for you 120 or fewer days

during the tax year �  Count up the total hours of all other employees in a

tax year and divide by 2080 �  If the result is not a whole number, round down to

the next lowest number

Changes to Section 105 – HRA accounts �  Employers were able to set aside money tax free

for employees to use to purchase their own insurance policy ¡  This was also taken as a business expense

�  Beginning in 2014, farms with more than 1 employee can no longer use pre-tax money to purchase individual plans

�  Special thanks to Apel and Associates (Tracy Nodolf) for this information

The SHOPs are open for business � The Small Business Health Options Program

created by ACA � Offers employers a choice of health insurance

plans and dental plans and tools for making informed choices

� Offers qualified small employers access to the enhanced Small Business Health Care Tax Credit

� Works with new insurance reforms to spur competition based on price and quality

Who can buy in the SHOP?

� Have 50 or fewer employees � Have at least one common law employee � Offer coverage to all full time employees (30 hrs

week or more) � Can be for profit or tax exempt � Meeting minimum participation rates (70%)

(though minimum is waived during open enrollment)

SHOP qualified health plans � Must meet new coverage standards: essential

health benefits � Benefit from broad protections under ACA;

insurers: ¡ Face limits on portion of premium dollars they can keep

for administrative and overhead costs ¡ Must disclose, justify and seek approval for rate hikes

above 10% ¡ Can’t rate based on pre-existing condition, for being

female or older ¡ Generally must pool risks across a state’s small group

market

Different plans for different budgets �  The SHOP marketplace offers employer choice �  Plan choices are grouped by metal level:

¡  Bronze, Silver, Gold, Platinum ¡  Reflecting plan’s generosity in covering the cost of benefits for

an average enrollee (bronze least, platinum most generous)

�  Plan benefits can vary within metal levels ¡  Must offer essential benefits but can differ in other ways

(networks of providers, formularies for drugs)

Employee Choice

� Right now many employers are only able to offer one choice to all employees

� 14 states will be offering choice to employees for 2015 plan year

� All expected to by 2016

h:p://www.healthaffairs.org/healthpolicybriefs/brief.php?brief_id=125  

How and when to apply � Apply anytime, no open enrollment period

requirements � Agents, brokers, navigators can help you � For 2015 plan year, available online at

healthcare.gov ¡ New online comparison, application, enrollment

and payment process for employers and employees

� Enhanced SHOP Call center services ¡ 1-800-706-7893 M-F 9am-7p, EST (TTY: 711)

Small Business Health Care Tax Credits �  All of the following must apply: •  Fewer than 25 full-time equivalent (FTE) employees •  Average employee salary is $50,000 per year or less (inflation

indexed) •  Employer pays at least 50% of full-time employees' premium costs •  Employer offers coverage to full-time employees through SHOP

Marketplace: https://www.healthcare.gov/small-businesses/provide-shop-coverage/small-business-tax-credits/

�  Tax credit is worth up to 50% of contribution toward employees' premium costs (up to 35% for tax-exempt employers) for a total of two years.

�  10 employees

�  Total of wages: $250,000 (@$25,000 per worker)

�  Employee health care costs: $70,000

�  2013 tax credit: $24,500 ($70,000 x .35)

�  2014/2015 tax credit: $35,000 ($70,000 x .50)

Tax Credit Example: Small Dairy Farm

�  Penalty for not providing health care coverage ¡  $2,000 per year for each full time employee starting at employee #31 ¡  Example: 60 employees: 60 – 30 = 30 x $2,000 = $60,000 per year

penalty for not providing health coverage ¡  Penalty will increase with rising insurance premiums

�  Penalty for not providing affordable and adequate

health care coverage ¡  If any employee has to pay > 9.5% of income for employer’s coverage AND/OR ¡  If coverage does not pay at least 60% of covered health care expenses ¡  $3,000 per year for each full time employee receiving a tax credit up to

maximum of $2,000 per year x number of full time employees starting at employee #31

¡  Penalty will increase with rising insurance premiums

Employers with 50+ Employees JANUARY 2015: 100+ Workers (70% Coverage) JANUARY 2016: 50-99 Full-Time Workers

Employed based insurance is deemed affordable if the

annual premium for a self-only plan (not a family plan)

costs less than 9.5% of a person’s annual household

gross income.

Insurance Affordability

Insurance is deemed adequate if it is a 60/40 plan.

That is no more than 40% of the total health care

costs in a year would be expected to be paid by the

average person insured in this type of plan. Many

current employer-provided plans are 50/50 or even

less.

Insurance Adequacy

�  More than three-quarters (78%) of 2.1 million U.S. farms do NOT hire labor (Ahearn et al., 2014)

�  Rather, labor is provided solely by family members

�  For these farmers, obviously, the ACA employer mandate does not apply

�  The only way family farms are affected by the ACA is by the individual mandate to have health insurance

http://www.ers.usda.gov/amber-waves/2014-march/family-farming-in-the-united-states.aspx#.VM_qs02_yM8

But, Keep in Mind…

�  Undocumented immigrants aren’t eligible for ACA coverage through marketplaces

�  Most seasonal farm workers and their families are uninsured

�  Barriers: cost, language, transportation, no sick leave

�  Farmworkers may have better access at least to safety net providers (e.g., community health centers that are being better funded through ACA)

Resource: National Center for Farmworker Health: http://www.ncfh.org/

Farm Workers and Health Care

�  Compare your current insurance (especially individual policies) with Marketplace plans

�  Monitor income for tax subsidy qualifications �  Consult with a professional advisor if business is close to 50 FTE

employees ¡  Do the math: pay or play? ¡  Develop a plan to optimize mandate requirements within your

business model (e.g., more part-time, less full-time, limiting surges of workers to < 120 days)

�  Obtain a health insurance plan if you decide to cover employees. Make sure it both: ¡  Meets the 60/40 rule ¡  Costs less than 9.5% of your least (lowest) paid employee’s annual

(household) income.

Action Steps for Farm/Ranch Families

Browse before buying � Find premium estimates � Agents, brokers, navigators can help you use this

tool http://www.healthcare.gov/find-premium-estimates/ � Useful information to have on hand

¡ Number of full time employees ¡ Ages of employees ¡ Whether or not you will be offered dependent

coverage

Roberta Riportella, Ph.D. rriporte@ksu.edu

Comments? Questions? Experiences?

Consumer Assistance •  Toll-free hotline 1-800-318-2596

•  Navigators/Certified Application Counselors

o  Community and consumer-focused nonprofits, professional associations, others

o  Selected and trained by federal government

o  Provide outreach and impartial information

•  Agents/brokers

o  Licensed by states, additional ACA training required

�  Government materials ¡  https://www.healthcare.gov/choose-a-plan/

�  Some state Extension offices offering educational programs ¡  http://extension.umd.edu/insure

�  Online fact sheets offering assistance ¡  http://www.consumerreports.org/cro/2012/09/choosing-health-

insurance/index.htm

Assistance with choosing health insurance

�  Video: Healthcare Reform: Key Issues for Agricultural Producers

�  Features attorney Sheldon Blumling

�  One hour, 45 minutes long

�  Taped at a Cornell Cooperative Extension seminar

�  https://www.farmcrediteast.com/Products-and-Services/Video-Insights/Healthcare-Seminar.aspx

ACA Resource for Farm Families

�  Healthcare.gov Small Business: https://www.healthcare.gov/small-businesses/

�  ACA Employer Penalties: http://www.benefitscafe.com/newsletter/03-calculating-aca-tax-penalty.html and http://www.fas.org/sgp/crs/misc/R41159.pdf

�  ACA and Agriculture: http://www.growingproduce.com/article/34123/what-will-the-affordable-care-act-mean-to-agriculture

More Resources for Farm Families

Helpful Tools on the Web

�  https://www.healthcare.gov/find-premium-estimates/ ¡  Takes your State and county and gives you the plans in your

area and the premium costs

�  http://kff.org/interactive/subsidy-calculator/ ¡  Estimates the subsidy you would receive based on annual

income and number in family

Modified adjusted gross income – tax filing threshold X 1% Example MAGI = $45,000 Tax filing threshold for single filer= $10,150

Difference = $34,850 X 1% = $348.50

This is greater than $95 for an individual so income calculation will be used to assess penalty.

Using Income for Penalty Calculation

Calculating Full Time Equivalents (FTE) Employees �  For every month

¡  Number of employees that worked >130 hours ¡  Then add up hours of part timers and divide by 120 ¡  Add two previous numbers together

�  Do this for every month of the year and divide by twelve to get average

�  Must be 50 or more, not 49.8 http://www.healthcare.gov/fte-calculator/

�  Vast majority of farms have < 50 full time employees but many have seasonal workers

�  Need to determine if you average 50 FT employees for > 120 days in prior year

�  If you do, you are required to offer coverage

�  Calculators:

http://www.franchise.org/healthcare/calculator.aspx

http://www.retailmeansjobs.com/health-care-calculator

Seasonal Employee Rules