Health Insurance Expert: Employers Will Opt For Insurance, Not Penalties

Greg Hatcher, CEO of The Hatcher Agency, says health insurance reform measures are about to kick in a higher gear for state businesses, but none of his accounts are weighing absorbing penalties over providing coverage.

January 1, 2014 is the deadline for new aspects of the federal health care law – commonly referred to as Obamacare – to begin many new mandates for employer coverage. Hatcher, who owns the largest independent health insurance agency in Arkansas, is educating his accounts on what’s about to unfold before the beginning of next year.

Hatcher’s clients include groups ranging from two to 7,000 employees.  He says there are two groups of businesses that will be impacted by the federal health care law. For groups with fewer than 50 full-time employees, they are exempt from the law. Those above 50 full-time workers will have to grapple with the new law.

“One of the real shockers of health care reform is that the employer who already has health insurance, he’s the winner or she’s the winner,” said Hatcher. “The one that’s the loser is the one that does not provide health care coverage for the employees. Because now if they’re over 50 employees, they’re going to have to do it or pay the penalty.”

The law requires part-time worker hours to be calculated into full-time wages for purposes of complying with the law.  For example, if a company had two part-time workers at 20 hours a week, their wages would equal one full-time employee.

Hatcher says companies like Burger King and McDonald’s – which have a lot of part-time workers and have not traditionally offered health insurance – will be hardest hit.

“Even when they offer affordable coverage, most of the time a guy making $8 an hour is not going to buy it, even if it’s affordable,” he said. “That wake-up call is going to occur when they file their tax return in 2014, ’15, and ’16 and they start getting hit with penalties for not having individual health coverage.”

But Hatcher says that employers already offering coverage or who may be forced to provide coverage are not contemplating paying a penalty instead.

“When the law was first passed, that was a big issue. Today, I have 650 corporate accounts.  Not one single one is weighing that option,” said Hatcher.

He says the math just doesn’t add up to drop insurance coverage and absorb the penalty instead if they’re already covering employees.

Hatcher also says a “safe harbor” rule has already been developed for the law due to one of its unintended consequences. The original federal health care law required an employer to base its calculations on total family income. However, the impractical ability of a business owner to collect the wage data of a worker’s spouse resulted in federal officials declaring that the law should only apply to an employee of the employer.

“That’s pretty much what all employers are doing because it’s not worth running down the family income and tax returns and dealing with all that,” said Hatcher.

You can watch two separate interviews with Hatcher below.