Monday, Oct 22, 2018
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Local firms prepare for health law

Employers weigh coverage vs. penalty


Lori Drown, a lab technician at Plastic Technologies Inc., analyzes a plastic sample on a gas chromatograph. Her employer said she and other workers most likely won't be affected by the Affordable Care Act because the firm offers a premium health plan to workers.

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Tom Brady isn't doing much to prepare his company for the Affordable Care Act.

Mr. Brady, chairman and chief executive officer of Plastic Technologies Inc. in Holland, said his business offers a premium health plan to workers and most likely would be unaffected by the U.S. Supreme Court's recent decision to uphold the act, which takes full effect in 2014.

"The real answer is we are not doing anything," he said. "We are reviewing it to see if there's anything major, but we provide health care."

Plastic Technologies is just one example of how businesses will be affected by the act: Companies face a spectrum of outcomes under the law depending on their size and structure.

The law, which affects companies with 50 or more full-time employees or their equivalent, has employers carefully considering whether to offer health insurance to their workers or pay a penalty for not doing so, experts familiar with the act said. It all comes down to the bottom-line costs, they agreed.

"It's not going to be the same for any two employers," said Antoinette Pilzner, a member of the law firm McDonald Hopkins, business advisory attorneys.

Businesses that offer health care might upgrade plans or adjust how much they contribute, but it shouldn't be a big change from what they're doing now, said John Goddeeris, a professor of economics at Michigan State University.

Businesses with fewer than 50 full-time employees will be virtually unaffected by the law, he said.

Businesses that currently don't provide health-care insurance, however, might find themselves adjusting budgets and altering the way they operate, even if they decide not to offer insurance to their employees, said Gbenga Ajilore, an associate professor of economics at the University of Toledo.

For many companies that struggled during the Great Recession and are in the beginning stages of recovery, adding health-care costs could be detrimental, Mr. Ajilore said.

"It may be financially wiser to pay the penalty," he said.

The penalty -- $2,000 for each full-time employee after the first 30 -- will make business owners scrutinize every dollar they spend or don't spend on health care, Ms. Pilzner said.

"It's an additional cost to them," she said. "Clearly, for them, the question becomes, 'Well, what can I do with $2,000?' "

Adhering to and implementing the law also will create challenges because it's unfamiliar to virtually everyone involved in the process, Ms. Pilzner said.

Companies on the cusp of employing 50 people will have to calculate whether their part-time staff equates 50 or more full-time employees, she said.

"Ramping up is going to be challenging," she said, adding that the calculation to count part-time employees is complex.

The law also could make some companies that hover around the 50-employee mark question whether to add or subtract people.

The government should try to make the transition seamless and ensure businesses that incorrectly apply the law aren't unfairly penalized, Mr. Ajilore said.

Although the law comes with its challenges, there are perks for employers who provide health care, Ms. Pilzner said. Employees who maintain good health and have regular checkups are less likely to develop chronic conditions or illnesses that can cost a company money down the road, she said.

"Employers do derive some benefit for providing health insurance to employees," she said.

Those perks don't end with the financial side of things, Mr. Goddeeris said.

Providing comprehensive health care is a way to attract talent, he said. Although competition is stiff for jobs at the moment, good health-care benefits will ensure the fierceness among prospective employees continues as the economy improves, Mr. Goddeeris said.

Businesses with fewer than 50 employees are not required to provide health insurance to their employees. But those businesses are eligible for tax credits if they provide health insurance. The credits work on a sliding scale if the business has up to 25 employees and pays average annual wages below $50,000.

Contact Kris Turner at: or 419-724-6103.

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