PLANET has long been known as "The Voice of the Green Industry." From participating in lawn care hearings in the early 1990s, to reaching millions with PLANET’s benefits of turf messages, to the recent H-2B legislation, the Association’s government affairs department continues to be a key resource for the Green Industry.
PLANET works at the federal, state and local levels of government to ensure the laws and regulations by which lawn care professionals must abide are reasonable and responsible, and do not unduly burden their member companies. PLANET is the only entity that represents the professional lawn care industry before the U.S. Congress and federal agencies, such as the EPA, Department of Labor, Department of Transportation and the Federal Trade Commission. PLANET monitors state legislation and provide updates on pertinent legislation to members. PLANET also helps members develop legislative strategies, talking points and issue position papers, and does face-to-face lobbying when requested.
RECENT DEVELOPMENTS IN THE NEWS
Health Care Reform and Small Business
Over the course of the next several years, the recently passed health care reform law will be implemented. Some of its provisions are not slated to take effect until 2018, but from 2010 to 2013, changes largely will involve new taxes, fees, and mandates on individuals and small business. Most health care system changes begin in 2014 and later. So, what does this all mean for small business, and what exactly constitutes a “small business”? The federal government defines a small business as a company with fewer than 100 employees, but your state may define a small business differently (for example, a company with fewer than 50 employees).
For a great overview of and timeline for the health care bill and how it relates to small business, check out the March 24, 2010, article in Business Pundit, “What Health Care Reform Means for Business.” Starting in 2010, here are some of the finer points you should know:
- Very small companies (10 or fewer employees) with low-wage workers (they earn less than $25,000 on average) may be eligible for a 35 percent tax credit for purchasing group health insurance for employees.
- Small companies with 25 or fewer employees whose average annual wage is $50,000 and who contribute at lease 50 percent of total premium costs may qualify for a similar, initially smaller tax credit.
- Companies with more than 25 employees do not get a tax credit. Also, any employee who earns more then $80,000/year will be excluded from the company’s tax credit.
Each year after that sees one or more provisions added; for example, in 2011 employers will be required to report health benefits on W-2 forms, and, in 2012, for every business-to-business transaction of $600 or more, businesses will have to complete Form 1099s. This latter provision will result in an increased amount of paperwork for small businesses, but it pales in comparison to the impact of the provisions that are slated to take effect in 2014.
Starting in 2014, the following mandates come into play:
- States must set up health insurance pools called Small Business health Options Programs or SHOP exchanges that allow individuals and small businesses to group together to buy health insurance.
- Individual mandate: A ll U.S. citizens and legal residents must have “qualifying” health coverage or pay penalties. For an individual, the penalty begins in 2014 at the greater of $95 or 1.0 percent of household income. In 2015, it grows to $325 or 2.0 percent. In 2016, it reaches $695 or 2.5 percent. (For families, the figure will be $2,085.) After 2016, the amount will rise by a cost-of-living adjustment.
- Employer mandate: The bill contains a complex employer mandate requiring some firms to provide insurance, pay penalties or both. The penalties are based on (1) the number of full-time (or part-timers counted as full-time equivalent) employees, (2) whether or not the firm offers coverage, and (3) whether or not one or more employees qualify for government subsidies toward the purchase of health insurance. An employee qualifies for a subsidy if his or her household income is below 400 percent of the federal poverty line ($88,000 for a family of four today). Here are some of the rules:
- More than 50 full-time employees. Does not offer insurance. One or more employees receiving premium subsidies. Penalty = $2,000 per full-time employee (minus the first 30 employees).
- More than 50 full-time employees. Offers insurance. One or more employees receiving premium subsidies. Penalty = lesser of $3,000 per subsidized employee or $2,000 per full-time employee (minus the first 30 employees).
- More than 50 full-time employees. Offers insurance. Has no employees receiving premium subsidies. No penalty on employer.
- 50 or fewer full-time employees. No penalty.
- If an employee’s household income is below 400 percent of the federal poverty line and his or her insurance premium falls between 8 percent and 9.8 percent of household income, the employer must offer the employee a voucher (equal to the amount the employer contributes toward an employee’s premium) to purchase insurance in the exchange. An employee meeting these characteristics will not trigger the employer penalties.
Employers with more than 200 employees will be required to auto-enroll employees into the employer’s health plans, though employees may opt out. There are extra penalties for firms with more than 50 employees who have a waiting period of more than 90 days before employees are eligible for insurance. The penalty would equal $400 for any employee in a waiting period of more than 30 but no more than 60 days, and $600 for any employee in a waiting period exceeding 60 days. (Waiting periods of more than 90 days are prohibited.)
Typically, low-wage employees do not have health insurance benefits and that is why these credits will only apply to 12 percent of the small group market. The tax credits are meant to encourage more small companies that do not pay high wages to offer health insurance; however, this is not likely to happen as companies with low wages usually have high employee turnover and are in industries where offering health insurance is not common.
In 2018, companies that provide their employees with “Cadillac” health insurance — health plans that cost more than $10,200/year for individuals or $27,500 for family coverage — will see that insurance taxed at 40 percent. This tax will be paid by the insurance company, but the cost will no doubt be passed on to the customer in the form of higher premiums.
What Penalties Could You Face?
If you have fewer than 50 employees, you are not required to provide health insurance and will not face any penalties. However, if your company has 50 or more employees and you don’t provide health insurance, you will be penalized $2,000 per full-time employee. The government won’t charge you for the first 30 workers you don’t cover. (Note: Full-time employee is determined by the IRS calculation for “full-time equivalent employees” or “FTE.” FTE is determined based on the employer’s average number of employees on business days during the preceding calendar year. Both full-time and part-time employees are considered; however, the number of part-time employees to be counted is determined by dividing the aggregate number of hours of service for those part-time employees for each month by 120.) You’ll face additional fines if you don’t cover 60 percent of overall employee health costs, as well as the government-defined set of services.
The fact is that most companies with more than 50 employees have some sort of benefit already in place. Those that do not offer benefits, do so because their industry is not stable or because they have other competitive cost constraints. While the $2,000 penalty will sting some firms, the penalty is still much less than offering coverage in most cases.
If you offer your employees health insurance:
- You must cover no less than 72.5 percent of the cheapest health plan you offer for individuals, and no less than 65 percent for families.
- You must automatically enroll every employee in a health plan with the lowest employee premium, unless they opt out.
If you choose not to provide health coverage:
- You must pay the Health Choices Commissioner (the person in charge of the SHOP exchange fund) 8 percent of the average wages paid during a predefined period of enrollment. They charge you a lower percentage if your annual payroll is less than $400,000.
If you choose not provide heath coverage and not to pay the SHOP fee, you will be fined $100 per day that you are in violation. You’ll also be fined if you try to entice a high-risk (sick) employee away from company-provided insurance and toward the SHOP to try to save yourself money
Seasonal Employees and Health Care Reform
The good news for the green industry and other industries that use seasonal employees is that doing so does not increase the size of a company from small to large. For example, if you have 40 seasonal employees and 20 full-time employees, you are still considered a small business. However, those 40 seasonal employees do not count toward small business tax credits either. Employers must provide health insurance to seasonal employees who work more than 120 days a year (24 weeks). If they work less than 120 days, the employer does not have to pay for health insurance and those employees must purchase insurance on the SHOP exchange. H-2B workers are expected to be considered like any other worker. Through the SHOP exchange, laid-off and fired employees will have access to health insurance that is priced the same as group insurance, and is guaranteed in the same way as group insurance. There will be no health care coverage for illegal aliens.
The Take Away
The recently passed health reform bill appears to offer some tweaks to the health insurance delivery model but fails to deliver meaningful reform to cut health care costs. With no cost controls, expect premiums to rise over the foreseeable future. Small business will continue to see ever-increasing premiums if serious action is not taken to reign in ever-increasing health care costs.