ATTORNEY GREGORY STORM (above) talked about the legal repercussions of the health-care reform act during a forum Tuesday at Milwaukee Area Technical College’s North Campus. About two dozen business representatives attended the forum, which also featured tax manager Joseph Schirger (right photo) of the accounting firm Schenck SC and benefits consultant Scott Fuller of Associated Financial Group. Photos by Mark Jaeger
County economic forum shows questions dominate reform debate
The federal Health Care Reform Act marked its first anniversary last month, but clouds of confusion continue to circulate around the legislation as it is gradually implemented.
Representatives from about two dozen local employers attended a two-hour forum Tuesday on the impact of changes on the health care law. The gathering, held on the Mequon campus of Milwaukee Area Technical College, was sponsored by Ozaukee Economic Development.
While those attending had hoped for some insight into how to cope with the federal mandate to provide health insurance coverage to workers in a tight economy, even the panelists were prone to occasional shoulder shrugs.
Scott Fuller, senior benefits consultant with Associated Financial Group, prefaced his comments on the federal “play or pay” insurance mandate on larger employers with the assessment that the implementation remains “clear as mud.”
Fuller said the momentum for the reform movement came from a health-care system out of control.
“This is a huge challenge. The No. 1 issue was the failure to control health-care costs. It is a fundamental problem and the health care reform legislation did address the issue of the uninsured, which by some estimates is as many as 30 million people,” he said.
“However, the fact is a lot of us have not taken control of how we access health care as consumers.”
The phased-in approach to the reform measures has made it difficult for all parties to know how to respond to the evolving regulations.
“This is new for employers, new for your employees and even new for regulators,” Fuller said.
Even the penalty provisions that will be imposed on large employers who fail to provide health coverage need some rethinking, he said.
As the law now stands, employers who have at least 50 full-time employees must offer insurance or face a $2,000 per employee penalty.
Still, Fuller said, many employers are already running the numbers to determine if it is cheaper to pay the penalty than provide the insurance.
A voucher system could further complicate the process, resulting in employers paying employees to secure coverage through a health insurance exchange.
“This is just the beginning, not the end. The process is a journey and it is difficult to prepare for because everything is shifting,” Fuller said. “Stay educated, stay informed.
Your employees will need you to guide them down this road.”
Attorney Gregory Storm of the law firm Reinhart Boerner Van Deuren also commented on the unpredictable status of the reform act.
Storm noted that the reform law is more than 1,000 pages long and includes 3,000 administrative directives.
“Still, there are a lot of open questions. Trying to come up with where the law was going last year would have been like trying to predict this year’s (NCAA) Final Four. Now
that the law has been adopted, it is more like trying to predict the weather. It requires some educated guessing,” he said.
Continuing insurance coverages can be protected from the tightened provisions of the law under a “grandfather” clause, but eventually that shelter will disappear, he said.
The law dictates that new insurance coverages will have no lifetime limits on “essential benefits,” must be extended to children of employees up to age 26 and eliminates most
exclusions for pre-existing conditions.
Storm admitted the legislation generates strong political sentiments.
“You hear a lot of Republicans say they are going to repeal health-care reform, but if that occurs, what do you replace it with?” he asked.
Ultimately, he said the U.S. Supreme Court is likely to intervene because of lawsuits filed by several states.
“We are likely to see modifications in the legislation rather than full overhaul,” Storm said. “Our advice to employers is ensure compliance with all mandates to avoid the onerous penalties, consider the cost implications in designing a plan and stay tuned.”
Joseph Schirger, tax manager for the accounting firm Schenck SC, said the reform law has already undergone substantial tweaking.
For example, Schirger said, the original law would have required 1099 forms to be sent to anyone who provided $600 or more in services to a company to determine what level of insurance the firm would have to offer its employees.
“That would have resulted in millions of additional 1099 forms being prepared,” he said. The provision was stricken from the law last year.
Still, Schirger said several other surprises for employers lurk in the law, starting in 2013. They include a .9% Medicare tax on wages and self-employment income and a 3.8%
tax on net investment income.
Individuals would also face penalties for not carrying health insurance, starting in 2014. The penalties would range from $95 to $695.
Like the other speakers, Schirger said employers can’t take the risk of ignoring the law.
“It may end up getting repealed, but it is the law right now and we are advising clients to comply,” he said.