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Home | BakerHostetler

Daniel Kaufman Comments on FTC Monitoring of Consumers’ “Right to Repair”

Adam Finerman Adds Explanation to Business Insider Article on Form 10-K

Melinda McLellan Serves as Panelist at Transportation Research Board Conference

Amy Mudge Speaks on Virtual Panel for ACI’s Food Law and Regulation Boot Camp

The Patient Protection and Affordable Care Act (PPACA) offers companies with more than 50 full-time equivalent employees a choice: they can offer their employees affordable employer-sponsored health care, or they can pay a penalty not to, according to the November 2012 issue of InsideCounsel magazine (“<a href="http://www.insidecounsel.com/2012/10/30/employers-must-choose-to-pay-or-play-under-the-aff?ref=hp">Employers must choose to pay or play under the Affordable Care Act</a>”).  Many employers are now weighing their options and preparing for the consequences of paying or playing.  The PPACA’s requirements that employers with more than 50 full-time employees offer coverage or pay a penalty will hit particularly hard in the service sector, Partner <a href="http://www.bakerlaw.com/johnjmcgowanjr/">John McGowan</a>, said in the article, because those high-turnover industries haven’t felt the need to offer health care in order to attract employees.  “This changes the economics of those businesses substantially,” he added, estimating that the cost will be the equivalent of a $2 per hour increase in the minimum wage. He noted that single outlet restaurants, motels and retail stores with fewer than 50 full-time employees will be exempt from the PPACA and therefore will gain a competitive advantage over their competitors that are part of national chain and bound by the law’s requirements and penalties.  The cost analysis continues to get more complicated when considering the nondiscrimination provision, which will be problematic for employers with an array of employees at different salary and responsibility levels.  One example is the restaurant industry— management typically has health care coverage but waiters and kitchen staff don’t. “You can get out of the $2,000 per employee penalty by offering everyone access to coverage, but to get out of all penalties, you have to offer it at 9.5 percent of household income. That’s a pretty low threshold for servers or shift cooks,” said McGowan. “The business will incur some meaningful costs it doesn’t have in the budget right now.”  Employers are also concerned about whether the new health care system will offer viable alternatives to employees who lose company-sponsored insurance. Those employees would likely have to buy coverage through one of the new health care exchanges, which the states are supposed to run. But no one knows yet how the exchanges will work, what providers will participate and how much the coverage will cost, the article reported.  Multistate employers may find significant differences in what is offered from one state’s exchange to the next. “In some states, the exchange may function perfectly well, and in some it may be highly dysfunctional, if it is functional at all,” McGowan says. “So I don’t know what I am going to be seeing if I am a multistate employer.”

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McGowan Discusses Affordable Care Act Implications for Employers in InsideCounsel

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