Clients are coming to accountants asking for advice about the health care reform law, especially after the shaky rollout this month of the online health care exchanges and marketplaces by various states and the federal government.
The health care exchanges launched on October 1 with a number of technical problems, particularly on the federal government’s HealthCare.gov site, preventing many of the uninsured from enrolling or comparing the various health insurance plans offered (see ‘Obamacare’ Demand Signals Potential Success for Exchanges). A number of accountants and accounting firms have targeted new services at clients who are concerned about the many complex requirements of the Affordable Care Act, particularly as aspects like the health insurance exchanges take shape (see Accountants Offer Advice on Health Insurance Exchanges).
Sylvia F. Dion, MPA, CPA, founder and managing member at PrietoDion Consulting Partners LLC in the Boston area, is finding that her small business clients are perplexed about the new exchanges. “In speaking with small business clients about the health exchanges, I’m finding that in general, there’s confusion on how the various requirements of the ACA apply to them, especially for those businesses that have fewer than 50 employees,” she said. “Also, small businesses that are interested in the Small Business Health Insurance Option Plan (SHOP) are hearing about various changes, such as that they’ll be required to choose only one plan for all their employees. That is, they won’t be able to pick and choose a different plan for each of their employees. Also, small employers in states whose exchange will be administered by the federal government, such as Florida, will have to wait until November 1st to apply online.”
Dion also found that some business owners believe they can’t apply at all at this point, even though they are able to apply by mail or over the phone, if not online. “Another point of confusion—more so for individuals—is that they believe being insured is optional,” she said. “They don’t realize that it’s mandatory (unless they are in an exempt group) and failing to be insured will subject an individual to both federal and state penalties.”
Dion believes the various requirements are confusing to smaller businesses, especially those that have an in-house professional dedicated to keeping up with the various changes. “Although I don't necessarily advise clients on what choices to make, I do try to clear up some of the confusion, explain what I do know and point them in the right direction,” she said.
Ed Burdorf, managing principal of the firm Burdorf, Parrott and Associates, P.C., in Emmetsburg, Iowa, said he has not advised anyone yet, but he did try the subsidy calculator on the Henry J. Kaiser Family Foundation’s Web site to see what the net insurance would be for various individuals. “It appears that most companies could increase their employees’ salary and have the individual get insurance on the exchanges,” he pointed out. “The company would seem to have considerable savings by doing this.”
Burdorf said he tried using the calculator for one employee in Iowa, a single mother who earns $20,000 per year. He found that the insurance cost for the year would be $400, compared to $3,812 of unsubsidized premiums. He then tried using the calculator for a family of four and found that the unsubsidized cost would be $7,625, but the subsidized would be $1,965.
“It seems that a company that is now paying for insurance for its employees (those with less than 50 employees) would come out way ahead if they increased the salary enough that the employee can pay for the insurance and the company drops the insurance benefit,” Burdorf remarked.
For Brian T. Stoner, a CPA in Burbank, Calif., who specializes in tax preparation and planning for entertainment industry clients and small businesses, the advice he is giving them about the new health insurance exchanges depends on their income and the availability of other health insurance policies. “The availability of the reimbursements for insurance purchased through the exchanges makes them enticing if the income of the client qualifies them,” he noted.
Filipus Suandi, EA, a tax practitioner and controller in the Atlanta area, said he would provide his business clients with general information such as to provide notice as required to their employees. He also would let clients know that the state of Georgia has opted for a federally run insurance exchange rather than setting up its own state exchange. “The Gold, Silver, and Bronze plan under the exchange are not as robust as their current private group plan,” he observed.
Suandi also lets clients know that Jan. 1, 2014 is the date when the individual mandate takes effect, while Jan. 1 2015 is the date for large employers, and that a tax credit may be available for small business if they qualify. They should contact their insurance agent to get quote comparisons, he noted.
“I have also heard some concerns from clients, such as their health care costs will go up and their tax money is being used to fund Obamacare, thus further damaging the already huge government deficit,” Suandi noted. “My response is that this is nothing new. Health care costs have been rising every year and we have had a deficit since 2001 (Clinton/Bush era). Additionally, there are various tax increase such as the additional Medicare tax, foreign importers, indoor tanning, etc., attached in Obamacare to help fund it.”
He believes the young, healthy and wealthy are probably the two groups that will see the most direct impact in terms of higher insurance premiums and taxes. “Over the long run, we'll have to wait and see how it will impact all of us,” Suandi added.
Tracy Kellogg-Brodeur, owner of Kaleidoscope Marketing Strategy in Wilmington, N.C., which caters to small businesses and accounting firms, said her company has notified its clients who have employees of the requirement to mail each employee a certain form by Oct. 1, 2013. But she is also telling clients to hold off for now on signing up for the health insurance exchanges. “We have recommended that they wait until the website volume settles down, as we continually receive calls that the site has crashed,” she wrote. “We are working with a local health care representative who is helping everyone sign up as a service to the community.”
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