Firm outlines expected penalties, costs of exchanges

By SEAN ELLIS

Capital Press

A national business consulting firm used eye-popping numbers to encourage Idaho farmers and agricultural businesses to start preparing now for the many provisions of the national health care reform act.

For example, a "pay or play" provision of the act would penalize businesses with more than 50 employees $2,000 per employee annually, beginning in 2014, if they do not provide health care coverage.

Even if the business does offer health coverage, it would be penalized $3,000 for each worker who instead chooses to get their insurance through a health care exchange, which is a virtual market for health insurance each state is required to create.

The only way to stop an employee from getting their coverage through the exchange is to offer better coverage.

The costs and requirements of the Patient Protection and Affordable Care Act were presented Aug. 31 during the Idaho Potato Commission's annual meeting in Sun Valley by Moss-Adams, an accounting firm based in Yakima, Wash.

The numbers struck Kent Sargent, account controller for Pleasant Valley Potato, a potato supplier in Southeast Idaho that employs about 80 people.

Factoring in an exemption for a company's first 30 employees, Pleasant Valley could be facing a $100,000 annual penalty if it doesn't provide health care coverage for its workers.

"Those are some very big numbers," Sargent said. "It's going to impact our business significantly. I'm very concerned."

Chris Rivard, national practice leader for Moss-Adams, said a lot of employers are considering dropping health coverage entirely because it would be cheaper for them to pay the penalties.

That includes Caterpillar, which estimates it would save 70 percent on health care costs by doing so, and AT&T, which believes it could save $1.8 billion by dropping coverage for its 300,000 employees.

Sargent said Pleasant Valley Potato will have to look at its options closely before deciding whether it's financially more feasible to provide health coverage or pay the penalty.

He said the business has already been discussing the health care act, but following the Moss-Adams presentation, "we'll have to revisit it again. It's coming up quick."

Businesses also face significant reporting requirements under the act. For example, after 2012 they must include the total cost of employer-sponsored health coverage on W-2 forms. The deadline has been extended to 2013 for businesses with fewer than 250 employees.

The Moss-Adams seminar was set up by the Idaho Grower Shippers Association and IGSA President Travis Blacker said potato growers, sheds and processors have a lot of questions about how the act will affect them.

"A lot of them are concerned about it," he said. "They're still trying to figure it all out. It's quite difficult to read through (it all)."

Blacker said the slide presentation will be made available on the IGSA website at www.idahoshippers.org .

Moss-Adams officials said major decisions and political issues involved with the act will be pushed beyond the 2012 elections if possible, and piecemeal changes to the individual mandate portion of the plan may be made, but it's doubtful the act will be repealed.

"It's something you should definitely be focused on; it's coming fast," Rivard said. "You have a cost analysis to do. If you haven't started taking a look at this, you should."

Recommended for you