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Health care plans being assessed

RELATED: View more stories from health reporter Jim Hall.


Some local business leaders seem hesitant to say it, as if the federal government could issue a ruling at any moment that puts them back in the soup.

But they’ve studied the Affordable Care Act. They’ve heard presentations by insurance experts, viewed Web seminars and been briefed by their human resources people.

After all of that, they’re thinking that maybe, just maybe, the new law won’t hurt them so badly after all.

As Matthew Simmons, president of the Capital Ale House restaurant chain, put it, “We’re in a really good position for this changeover. We’re pretty much compliant.”

Of course, the law is complicated, and much is still unknown. Individuals and some local business owners have not been spared. They face penalties if they don’t meet its requirements.

“It’s going to have a major effect on our business,” said Karl Karch, owner of Home Instead Senior Care.

Yet two groups of employers—the small ones that employ fewer than 50 people, and the big ones that already offer comprehensive health plans—have escaped the initial fines that are a feature of the act.


The law encourages businesses to offer health insurance to their workers. And in some cases, it fines those that don’t.

But it exempts those with fewer than 50 workers. (Actually, it uses a formula that combines full- and part-time workers and calls them full-time equivalents.)

Those who employ 50 or more of these full-time equivalents face fines if they don’t offer health coverage. The fines will kick in if their workers qualify for government subsidies to help them buy coverage on the online insurance marketplaces that will open later this year.

Even if they do offer coverage, employer’s plans must be affordable and sufficient, according to rules that the government is still drafting. If not, employers could face fines.

Business owners are trying to make sense of all this.

“That piece of legislation was some 900 pages, and we’re still trying to get our arms around it,” said Kent Farmer, president and chief executive officer of Rappahannock Electric Cooperative.

Affordable, according to the law, means that the employees’ share of their health insurance premium is no more than 9.5 percent of their adjusted gross income.

Sufficient, according to the government, means “bronze-level” coverage, or a comprehensive basket of benefits, such as doctor care, hospital care, outpatient care and medicines. However, the rules have not yet been published.

Many local employers already offer this type of insurance and pay a significant portion of the premiums. So will their plans satisfy the law and spare them the penalties?

“We think we do, but we really don’t know,” said Lloyd Harrison, president and chief operating officer of Virginia Partners Bank.

Added Kevin Dillard, president of LifeCare Medical Transports, “I would hope we meet or exceed it.”


But the collective sigh of relief coming from some corporate boardrooms is not heard at businesses like Karch’s Home Instead Senior Care or Neda McGuire’s Comfort Keepers.

These and others like them are large-group employers who hire lots of part-time workers and do not offer “bronze-level” health plans. They face hefty fines.

“I think everybody should have access to health care, but I just wish it was done with better thought, with more input from real business owners,” McGuire said.

Karch employs about 190 people, and McGuire has more than 200. Both provide in-home, non-medical care to the sick and elderly.

Both companies have a stable of caregivers who serve the clients. Most of the caregivers are part time since they work less than 40 hours a week.

But, according to the Affordable Care Act, they count as full time if they work more than 30 hours a week.

Both companies offer limited health insurance plans, but those plans won’t meet the government’s requirements. Karch and McGuire said they plan to drop those benefits next year.

“I will then be put in a position of paying a penalty,” Karch said.

The penalty kicks in when one of the workers purchases coverage on a government exchange and qualifies for a subsidy.

Both expect that to happen since their caregivers earn from $8 to $11 per hour.

“I’m bracing myself. It’s just a matter of how big that penalty is,” Karch said.

Subsidies will be available to those who earn from 100 to 400 percent of the federal poverty level. That’s $11,170 to $44,680 per year for an individual.

The employer penalty is set at $2,000 per full-time worker, with an exemption for the first 30 workers.

That means, Karch and McGuire said, that they’ll have to increase rates to their clients, or limit their workers’ hours. Or both.

“It’s the proverbial rock and hard place. I’m squeezed,” Karch said.

Jim Hall: 540/374-5433



The Affordable Care Act has its critics, yet some local business leaders describe themselves as supporters. They include:

Kevin Dillard, president, LifeCare Medical Transports:

“We firmly believe that everybody ought to have access to health care. The line of business that we’re in, we way too often see people who have fallen through the cracks and have not received appropriate care.”

Matthew Simmons, president, Capital Ale House:

“Looking back over the years, we’ve always had large increases in [insurance] rates. The last two years [because of the act] we’ve had the smallest increases ever.”



Government-sponsored online insurance markets will open later this year. Will local businesses drop coverage for their workers and tell them to buy individual plans on these markets? Several said they won’t:

Lloyd Harrison, president and chief operating officer, Virginia Partners Bank:

“We need to be competitive for employees. The other thing is more philosophical. We want to do what we think is the right thing for our employees.”

Kent Farmer, president and chief executive officer, Rappahannock Electric Cooperative:

“Our benefits package is a very important part of our overall compensation program. Our employees are protective of it.”

Paul Scott, president, Scott Insurance & Financial Services:

“Many employers will try to keep their health insurance at all costs.”



Some local businesses don’t fear the penalties that occur when their employees get relief on a government-sponsored exchange. Instead, they fear the 2018 tax that will be imposed on high-cost health plans, the “Cadillac” plans, valued at more than $10,200 a year for an individual:

Lloyd Harrison, Virginia Partners Bank: “It’s not far-fetched to imagine a point where our existing plan starts pushing up against that $10,200 limit.”

Kent Farmer, VEC: “Unfortunately, we may be in a group that gets defined as a Cadillac plan. It doesn’t take much.”

Paul Scott, Scott Insurance: “It could be a race to the bottom,” with employers offering only the minimum-required coverage.