This week, a Jersey nursery grower asks, "How will health care reform mandates impact my operation?"
To answer this, we need to consider:
- What are the contents of the Affordable Care Act as it stands now that affect agriculture?
- What do the mandates mean to a NJ farm in terms of implementation - costs, paperwork, and workforce availability?
- What preparations will have to be made in this grower's operation now to remain economically viable in 2014?
What are the contents of the Affordable Care Act as it stands now that affect agriculture?
NJ Farm Bureau has an excellent brief on what's known so far:
- Beginning in 2014, employers are required to provide affordable minimum essential coverage to their full-time workers unless they employ fewer than 50 full-time/full time equivalent (FT/FTE) employees.
- Full time workers are those that work an average of 30 hours or more per week.
- Full time equivalents are determined by dividing the aggregate numbers of hours worked by non-full time employees in a month by 120 hours.
- Seasonal workers that are employed for 120 days or less during the calendar year are not included in the employee calculation. (Regulations defining seasonal workers are pending).
- Affordable coverage means that an employee’s premium for employee-only coverage doesn’t exceed 9.5 percent of W-2 earnings.
The Farm Bureau summary goes on to detail existing penalties and tax credits. Details of the Act are expected to change as we head toward 2014. Nevertheless, it's an important document to read and understand - for growers and Ag Agents - as a first step in understanding the significant impact on agriculture.
The key goal of the Affordable Care Act is universal coverage through the creation of individual mandates and health insurance exchanges; employer "pay or play"; Medicaid expansion; and market reforms. While the mandates will adversely affect all small business, agriculture is especially hit hard because of its seasonal workforce and because a portion of that labor force is falsely documented and will be excluded from the insurance exchanges created by the Act. In a real sense, without immigration reform, there is no effective health care reform.
What do the mandates mean to a NJ farm in terms of implementation - costs, paperwork, and workforce availability?
Farm operations with greater than 50 full-time/full time equivalent employees need to do a cost benefit analysis. Based on that analysis, some experts are saying that an operation may have to "get out of the healthcare business" i.e.,
- pay the penalty of not offering coverage or,
- shrink your workforce in number (less than 50 FT/FTE) or time employed (less than 120 days)
Conversely, if those options are not economically feasible and you plan to offer benefit coverage, you may need to become intimately involved with the healthcare of your employees by offering wellness programs in an attempt to stabilize your operation's healthcare costs.
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| Employer Mandate and Penalties From: Western Growers Webinar The Supreme Court's Obamacare Decision: Impact on Agriculture |
The Western Growers Webinar* presents an example of a typical large farm operation showing costs related to "not offering a plan," "offering a plan," and the unintended consequences of the Affordable Care Act as it is applied to agricultural operations.
[*edited 4/12/2013: This webinar is no longer available. However, Western Growers regularly updates information on how the Affordable Care Act impacts growers. See Western Growers and browse through "videos" for Affordable Care Act related videos.]
What preparations will have to be made in this Grower's operation now to remain economically viable in 2014?
Stay abreast of the changes to the Affordable Care Act as time progresses, don't wait to the last minute to educate yourself and run a cost benefit analysis for your operation. Start making critical calculations on full time employee equivalents from aggregate total numbers of hours worked by part time employees. Working through the numbers will reveal the changes that need to be made before the Affordable Care Act mandates take effect.
Some sad unintended consequences for farmers are already clear. To the extent possible reduce workforce employment, contract and outsource farm operations services, and invest in machine harvesting and other labor saving automation. As one Jersey farm bookkeeper said to me, "It's complicated, costly, and makes you not want to be in business in this country."
