Though there's some 10 months yet before the key mandates of Obamacare kick in, Oklahoma employers need to decide now whether they're going to “play or pay,” observers say.
Effective Jan. 1, employers of 50 or more full-time equivalent employees must offer health insurance or pay annual penalties of $2,000 per full-time employee, excluding their first 30. Fines can be $3,000 per employee if a company's insurance is deemed inadequate (covers less than 60 percent of essential benefits) or unaffordable (costs more than 9.5 percent of a worker's salary or $117.67 monthly for a minimum-wage worker).
The key is “full-time equivalent,” Crowe & Dunlevy attorney Cori Loomis told guests at a health care seminar Friday at Quail Creek Country Club.
Employees who work 30 or more hours a week will be considered full-time, while the hours of a company's part-time workers will be totaled and divided by 120 (the monthly hours of a full-time worker), Loomis said. So an employer with 35 full-time workers and 20 who average 24 hours a week, for example, would be deemed as having the equivalent of 51 employees. The 20 part-time employees who work an average of 96 hours per month would count as 16 full-time workers — 1,920 (20 multiplied by 96) divided by 120, she said.
Even with the formulas, some Oklahoma employers find the impending mandates confusing. Meanwhile, while an Oklahoma medical startup and third-party administrator are scrambling to find creative ways to head off health care premiums predicted to shoot up as much as 65 percent or more next year.
Oklahoma City-based H&H Masonry Contractors is shy of the 50 mark with 47 full-time workers, Shelly Hillemeyer said.
About 30 of the company's workers get their health benefits through the local union, while owners don't offer insurance to the remaining hourly employees, Hillemeyer said.
Meanwhile, managers of Ponca City-based Opportunity Center Inc., which operates six residential homes for disabled adults in Kay County, are counting on Insure Oklahoma to remain intact, human resources director Taffy Locke said.
Locke said some 85 percent of the nonprofit's employees are covered through the state's Medicaid product, which uses Oklahoma tobacco tax revenues and matching federal funds to subsidize the premiums of low-income employees of companies with fewer than 99 workers, Locke said. “If the program goes away, I'm not sure we can afford to offer insurance,” she said.
Loomis and other observers predict health insurance premiums will rise next year in Oklahoma.
“Under the Affordable Care Act, insurers must cover more people and provide more benefits. But there's not a lot in the act to address the rising costs of health care,” she said. In fact, Oklahoma, is among 13 states expected to see hikes of 65 percent to 100 percent, Loomis said.
“We expect Oklahoma to be hit harder, because we're not used to covering conditions like autism,” she said, “or participation in clinical drug trials.”
Steve Wilson of Wilson Insurance Group agrees.
“Raising deductibles and shifting costs to employees won't work any more,” said Wilson, noting insurance over the past 13 years has risen 172 percent, compared with only a 47 percent increase in raises.
Health reform limits insurers from charging more than threefold for the older age band (64 and older), so industry observers expect the rates for younger people to increase 40 percent to 50 percent, Wilson said.
Meanwhile, companies of fewer than 100 employees with positive claims experience will be charged higher rates to offset those with bad claims experience and poorer demographics, he said.
Third-party administrator C.L. Frates suggests employers might consider self-insuring and contracting a firm like Salerno Health for employees' basic, or first-tier, health care needs. An Oklahoma City startup, Salerno (salernohealth.com) offers direct medical care, including primary care, cardiology, orthopedic and other specialty and surgical services, for $118 a month. MRIs are $50 and physical therapy, $10 a session.
“Health insurance was designed for catastrophic care, and never meant to cover urinary tract, sinus and other infections,” said David Rothwell, primary care doctor and Salerno managing partner. “That's like buying $3 windshield wipers at Walmart, and then submitting the bill to your car insurance company for payment.”
Somewhat like Salerno Health, Variety Care — which has several community health centers across Oklahoma County — is coordinating with small churches to provide a menu of prepaid services per member, per month, to their staffs, Chief Executive Officer Lou Carmichael said.
“We are who people go to when their employer is unable to provide insurance or access to care,” Carmichael said.