Small businesses stand pat on health care coverage as Affordable Care Act readies for rollout

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EIGHTY FOUR – Standing near the doorway of their new building along Carlton Drive in Eighty Four on Tuesday, Colin and Mary Ann Gallaway, owners of Gallaway Safety & Supply, were busy talking with members of the construction team from General Industries who are completing the 24,000-square-foot structure.


Hoping to move into the building in the next two months, the Gallaways, like most small business operators, are accustomed to dealing with the myriad details that occupy most of their working hours in a business that involves the sale of safety and industrial supplies on their online site, www.gallawayb2b.com.


“We sell the products that keep facilities running on a day-to-day basis,” Colin said.


When Mary Ann distributed information about the new Affordable Care Act to the company’s 22 employees two weeks ago, the outcome didn’t require a hard sell – employees indicated they wanted to stay with their employer’s offering. All but two workers are full-time.


“I think everyone’s going to stick with it,” Mary Ann said.


For Colin, offering health insurance only makes sense for his company, or any other for that matter, he said.


“For our full-time employees, we offer a health care package along with retirement, days off, what any good business should offer,” he said. “We think it’s a good way to retain employees.”


So as the ACA, also known as “Obamacare,” prepares to roll out a program Oct. 1 for selling affordable health insurance to roughly 32 million Americans, area small business operators like the Gallaways appear to be standing pat on their health insurance coverage.


Under the ACA, small employers – those with less than 50 employees – are eligible to receive access to lower-cost coverage by pooling their risk.


“I didn’t see any benefit” to changing what Gallaway has always done with regard to health care coverage, Mary Ann said.


Other area small businesses apparently are thinking the same way.


“We don’t intend on changing coverage for our employees, unless it would be majorly beneficial to them,” said Nick Cianelli Jr., president and owner of Liberty Lumber, a Canonsburg firm that employs 10. “We’re not looking for the cheapest way and we never have.”


Cianelli said because of Liberty’s size, Obamacare “doesn’t affect us much.” So he does not plan reductions of hours or workforce.


“In our business, we can’t afford to hire people unless they are more than just a body. They have to be more than adequate to work for us.”


Cianelli said, however, that he understands the plight larger organizations would face under the Affordable Care Act.


“I can’t blame some companies for cutting (workers’ weekly hours) to 29 1/2,” Cianelli said in reference to a fear that many employers could cut full-time staffers to part-time status to avoid paying for their health care coverge. “If they have numerous locations and employees, they can save tens of thousands of dollars,” he said.


Anthony Bruno does have a heap of locations and employees nationwide. He is the founder and chief executive officer of Anthony’s Coal Fired Pizza, which opened a restaurant along Route 19 in Peters Township a month ago. Anthony’s has 42 sites in six states, including 23 in Florida and two others in Western Pennsylvania – Monroeville and Robinson Township.


The Peters site has 36 employees, but just seven are full time.


Bruno wants to see how the national policy starts to unfold before committing to changes.


“No one is 100 percent sure” what is going to happen, said Bruno, whose company is based in Fort Lauderdale, Fla. “We’ll have to see how things work out.”


He said Anthony’s Coal Fired, nationally, has “mostly full-time people,” and the existing policy is “we don’t cut hours. We want consistency and the only way to be consistent is to have fewer people.”


Then there are the very small businesses like Rhodes-Hammers Printing Inc. in Waynesburg, a commercial printing shop with owner Jay Hammers and four employees, all of whom have health insurance through spouses or other sources.


Like some other area small business operators interviewed for this story, Hammers said he hasn’t had time to read through the ACA requirements.


While stating that he never received any letters or e-mail from the government about the ACA, Hammers said he doesn’t have the luxury of larger companies that have people focused on regulations.


“I don’t have an HR (human resources) department to come up to speed on the Affordable Care Act,” Hammers said. “My main concern is did the paper we ordered get here and did we get the job out on time?”


Action required

As the ACA begins its rollout, businesses large and small may take other approaches to comply with it.


The Obama administration has postponed until January 2015 the mandate for “large” employers – those with 50 or more employees – to provide health insurance or face penalties. But there is still a deadline looming for businesses to take some action.


By Oct. 1, all employers – whether they offer health insurance or not – are required to notify their employees either about their company’s insurance plan or about the new marketplaces that are opening to the uninsured.


Effective Jan. 1, all other employers will be required to cover their workers with health insurance or pay penalties, with exceptions for small employers.


The act will provide tax credits to certain small business that cover specified costs of health insurance for their employees.


Americans who have health insurance through their employers won’t have to do anything on Oct. 1.


While all U.S. citizens and legal residents are required to have qualifying insurance by Jan. 1, those without coverage will pay a tax penalty of the greater of $695 per year up to a maximum of three times that amount per family or 2.5 percent of household income.


Different approaches

Despite a reprieve until January 2015, larger businesses are already making changes that will eventually alter the way health insurance is purchased in the U.S.


Two weeks ago, grocery store chain Trader Joe’s said it was giving $500 to each part-time employee to purchase health care insurance on one of the exchanges created by the ACA and operated by the states.


Reports also surfaced recently that some large companies are considering dropping an employee’s ability to cover a spouse with the health insurance the company provides, meaning those spouses would be forced to find coverage elsewhere, either through their own employer or on one of the exchanges.


On Wednesday, Walgreen Co., the nation’s largest drugstore chain, said it will send workers to a private health insurance exchange where they will pick from as many as 25 plans instead of having the company give them two to four options.


Employers normally pay most of the coverage cost, and Walgreen’s contribution toward the benefit won’t change. It said the move will give its workers more choices and help them become better consumers.


During an informational meeting with Washington city council members, residents and small business operators, Congressman Tim Murphy acknowledged that he had heard fears that many companies might shift more employees to part-time status to avoid paying for their insurance.


Privacy concerns

Murphy, an Upper St. Clair Republican who opposes the ACA, on Tuesday introduced the IRS Health Records Privacy Act, which he said will safeguard the privacy of Americans by keeping medical records and protected health information off-limits to Internal Revenue Service and other federal employees. Under H.R. 3041, violators would face criminal penalties, including jail time, for unauthorized access to personal medical history.


Murphy’s bill comes in response to concerns over the ability of the IRS to protect individuals’ privacy and remain apolitical in light of the agency’s massive new responsibilities under the ACA. The law grants the IRS 46 new tax powers, from fining Americans who don’t comply with the individual mandate to purchase health insurance to handing out credits to insurance companies via the new marketplace exchanges.


“The IRS Health Records Privacy Act puts your private health care information off-limits to IRS agents and government employees who are set to take on broad powers under the Affordable Care Act,” Murphy said in a news release. “My bill protects confidential medical records and ensures your health care history is not subject to arbitrary scrutiny, misuse or politically directed targeting.”


He noted that a class action lawsuit filed in March alleges IRS agents “stole” medical records of 10 million Americans from a California health insurer.


Despite those concerns over privacy, it appears that the insurance exchanges required for Americans to purchase health care policies are ready, at least in Pennsylvania.


Those who plan on purchasing a policy can access the government website HealthCare.gov, enter their zip code and receive a list of insurers on the Pennsylvania exchange to contact. Purchase prices are based on age and gender.


Pa.’s situation

During the informational meeting, Murphy said he believed that Pennsylvania’s health care insurance cost would rise as a result of ACA’s implementation.


New data from the U.S. Census Bureau’s Current Population Survey show that health coverage obtained through an employer remains substantially below pre-recession levels, according to an analysis by the Pennsylvania Budget and Policy Center.


The PBPC analysis of census data, released Wednesday, also found that Pennsylvanians have not made up for health insurance coverage lost during the Great Recession.


It said in a news release Wednesday that just 65.6 percent of non-elderly Pennsylvanians had employment-based insurance in 2011-12, down from 70.8 percent in 2006-07, while the share of children covered by an employer dropped from 67.5 percent to 61.9 percent.


Employment-based coverage rates remain higher in Pennsylvania than in the U.S., with 58.4 percent of non-elderly Americans having coverage through an employer.


Enrollment in Medicaid grew nationally and in Pennsylvania during the recession, although growth was more robust for the nation as a whole. Between 2006-07 and 2011-12, non-elderly Medicaid coverage grew 4 percent nationally and by 3.4 percent in the commonwealth.


While Pennsylvania has a strong tradition of health insurance coverage, through employers and public programs such as CHIP, Medicaid and adultBasic, PBPC said the ACA offers a new option for Pennsylvanians.


In January, ACA will provide subsidized health care for individuals and families earning between 100 percent and 400 percent of the federal poverty level ($19,530 to $78,120 for a family of three). However, individuals between 50 percent and 100 percent of poverty with earnings of $5,745 to $11,490 will have no affordable option without Medicaid expansion.


“The governor’s ‘Healthy Pennsylvania’ plan has the potential to continue that great tradition by extending coverage to more than 600,000 Pennsylvanians,” said PBPC Director Sharon Ward, who added that while Corbett “is taking the right step in pursuing a Medicaid expansion … the timetable should be accelerated so that coverage can begin in 2014.


“A high quality, affordable plan that begins without delay and offers comprehensive care to individuals who have lacked insurance will restore peace of mind to those still reeling from the recession to help rebuild Pennsylvania’s economy.”


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