Fines may be least painful option for employers - The Packer

Fines may be least painful option for employers

09/08/2011 12:59:00 PM
Coral Beach

Coral BeachBusiness consultant Chris Rivard of Moss Adams LLC discusses how health care reform will impact potato growers and shippers in their role as employers at the IGSA convention Aug. 31. SUN VALLEY, Idaho — Potatoes may be relatively immune when it comes to spreading foodborne illnesses because of the consumer kill step, but potato businesses are not immune to the spreading costs of the nation’s health care reform measures.

From small individual farms to large corporate grower-shippers, representatives from Idaho potato operations audibly moaned and shook their heads at a health care reform workshop Aug. 31 at the annual Idaho Grower Shipper Association convention.

Two partners from the accounting and consulting firm of Moss Adams LLC discussed the status of the reforms and what they will likely mean for large and small employers.

The bottom line: Businesses should start crunching the numbers now so they can make informed decisions before the reforms go into effect.

Two mega-companies have already had spent considerable time and money looking at the possible financial effects, said Chris Rivard, national practice leader and Moss Adams partner. The costs of employers’ shares of premiums and other administrative fees are not the only considerations.

Rivard said Caterpillar Inc. found it could save 70% by paying federal fines and penalties rather than offering employees health care plans. Telecommunications giant AT&T found it could save $1.8 billion by dropping health coverage for 300,000 employees.

“Many companies are saying ‘We won’t be the first to drop health coverage,’ but they are also saying they won’t be third,” Rivard said. “In other words, when plans start falling, it will be like dominoes. …”

“Many people say reform will begin a death spiral for group plans. Some predict that by 2015 commercial insurance as we know it won’t exist.”

Some specific bumps in the reform road for employers will include:

  • increased reporting responsibilities regarding health care benefits;
  • increased reporting responsibilities for Form 1099 employees; and
  • bans on discriminatory plans such as those that offer administrators and executives better benefits than rank and file employees receive.

The “insurance exchange” concept could also increase expenses for even the smallest of employers. If, for example employees find a better plan on the federally mandated online “exchange” their employer can face penalties that are not tax deductible.

“How can we keep workers from going to the exchange?” one IGSA attendee asked.

Rivard’s answer was simple: “Offer a better plan.”

Many insurance and business consulting firms have software that can help employers figure out financial scenarios, Rivard said.

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