The Breeders’ Cup Forum: Understanding the Affordable Care Act

by | 10.16.2013 | 1:12pm

With the Affordable Care Act now U.S. law, there is a great deal of confusion among employers and individuals working in the horse business about what they must do to adhere to the health care program that is commonly referred to as Obamacare. We went to the experts for some answers to frequently asked questions: Jeff Truitt, the senior vice president of Benefit Insurance Marketing, and Deanna J. Johnson, the director of compliance for the Lexington-based company that works with the Kentucky Thoroughbred Association in providing health care benefits to thousands of individuals employed in the horse business.

What are some of the key dates and upcoming requirements of the Affordable Care Act?
Since the law was originally passed March 23, 2010, there's been three years of baby-stepping certain compliance pieces to employers' health plans: covering dependents to the age of 26; certain preventive services and certain women's health care issues have been expanded. It's been relatively benign to most employers and individuals.

The major impact date is Jan. 1, 2014. Oct. 1 got much attention because it was the promotion date of the federal exchanges for the 36 states in the federal program. Kentucky is one of a handful of states to have its own health care exchange. There is a lot of emphasis and confusion and concern within the marketplace around this date because of misinformation that is scaring people in regards to whether or not their doctor is going to be in the coverage network, whether their rates are going to change. Each employer currently providing health benefits has its own renewal date. That is an insurance contract, so things cannot change in the middle of that contract just because of the Oct. 1 date.

Will employers with 50 or more employees be required to provide health coverage beginning Jan. 1, 2014?
No. That is one of the provisions that's been delayed a year.

Are individuals not currently covered by an employer required to get health insurance by Jan. 1, even if they are not a U.S. citizen?
Yes, they are. If you are an American citizen, or if you are working here and filing federal taxes, and you're not incarcerated or here illegally, you are required to have coverage Jan. 1, 2014, or on the first date that your current health plan renews in 2014.

If individuals in the U.S. on a work visa have health insurance coverage in their native country, does that satisfy the individual mandate?
Some of the Visa programs, especially those coming from Europe, require health insurance to be bought separately. I don't believe out of country insurance will satisfy the mandate.

What is the penalty to individuals if they don't buy health insurance?
The penalty in the first year is $95 or one percent of their gross income, whichever is higher. The penalty will not be enforced until an individual files his or her tax return for the 2014 calendar year, which obviously would not be until early 2015.

Will it be more difficult for farm workers to get health insurance because of the potential for injury working around horses?
No. Insurance companies can no longer ask medical questions on the individual market or small group market. There are only four criteria that can determine a modified community rate: age, tobacco use, geographic location, and who you are covering. Those are the only criteria an insurance company can use to determine rates.

Will individuals qualify for subsidies to help pay for the insurance?
With the Affordable Care Act, the state of Kentucky has increased the federal poverty level from 100 percent to 138 percent, so more individuals may be eligible for Medicaid. It's also expanded the definition of eligibility to include anyone over the age of 65 making under 138 percent of the federal poverty level. For a single person, that expanded number is roughly $16,500 in gross earnings.

As of now, on Jan. 1, 2015, employers with 50 or more full-time employees will be required to offer health care. How is that going to work in an industry where there are so many seasonal workers?
We're waiting for guidelines on that. The initial determination of how to count and track employees was extremely difficult to communicate and to understand. We think that's one of the reasons the employer mandate was delayed until 2015, because the counting of employees was so difficult, with the criteria of constantly trying to track the number of employees and hours worked. The majority of farms are tracking hours, just like any employer with an hourly workforce, but the seasonality makes it that much more difficult.

The law counts employees that work at least 30 hours a week as full time. That has given employers some concerns. Do they hire more people and have them work fewer hours? For an unskilled labor force you might be able to do that, but for a skilled labor force that's going to be a challenge.

Will employers have to pay a certain percentage of the employee's health care?
The employer has to pay at least 50%. So if the monthly premium is $300, the employer has to pay at least $150. The $150 paid by the employee cannot exceed 9.5 percent of his or her gross income for that month to be considered “affordable.”

An employer's plan has three criteria. It has to cover essential benefits, which the majority of plans in Kentucky do. It has to meet an actuarial value of 60%, which means the plan has to pick up 60% of the cost of care, which the majority of plans do. The third piece is the affordability. If the employee's payroll deduction is less than 9.5 percent of the gross wages – for the employee only cost – the plan is deemed affordable. They are not eligible for any type of subsidy on the marketplace.

There are some unintended consequences. If a plan is deemed affordable (as above), the dependents of that employee are not eligible for a subsidy on their health care. If a family premium is $1,000, the law is only looking at the single coverage, in this case $300, half of which must be paid by the employer. Employers are not required to pay dependent coverage, so that employee would be responsible for the $700 dependent care and they would not qualify for a subsidy. That's why some companies are dropping dependent coverage, so those dependents can qualify for a health care subsidy on the exchange.

What are some concerns you're hearing about the new law?
There are a lot of questions about whether someone's doctor will be in the network, whether rates are going up dramatically, or plans or coverage will be cancelled. There's a lot of fear of what's out there in the new marketplace, the official name for the exchange. One of the things we do know is that the federal government really pushed the insurance carriers to come up with lower, affordable rates. They've been able to accomplish that, but they've done it by reducing the level of benefits, with higher deductible, higher maximum out-of-pocket costs, and also reducing their networks. Some carriers are going to what is called a “skinny” network, where not all the hospitals and doctors are included. Therefore, when you take away co-pays from a plan and put more things into deductible and co-insurance, and also reduce the network, you're going to be able to be achieve a lower rate.

People may look at the exchange and say “Oh, that's really great,” but when they start looking at the benefits they need to realize it's not a low deductible and low co-pay, it's high deductible and no co-pays.

A lot depends on how much you need care. If you're sick or been denied benefits before, the exchange will be a good deal. The exchange is trying to hit something that's affordable, but everyone's definition of affordable is different. When you go and use the plan, that's when I think people will really be surprised – not with private insurance but with the marketplace insurance. They need to be careful when they are looking at the marketplace. They need to know exactly what the plan looks like and what the network involves.

  • Richard C

    Whatcha gonna do, when the IRS runs wild over you?

  • Brandy

    Whatcha gonna do when stupid people vote for someone like Obama?

  • John McEvoy

    I have a relative with an existing condition who has long been denied but is now eligible for coverage. I have another one with three collegians under the age of 26 who are now covered by their parents’ insurance because of Obama Care. How stupid do you think these people are, Brandy?

    • kyle

      What state didn’t require that “collegians” be covered under their parents’ insurance before the ACA?

      • AngelaFromAbilene


    • brussellky

      And you want me to subsidize them? I don’t even known them!

  • Milt Toby

    Great information, Ray! Critics seem to forget that the Affordable Care Act was passed by both the Senate and House, signed by the president, and upheld by the United States Supreme Court. Like it or not, it’s the law.

    • Bein

      Which will further bankrupt the United States.

      The bill was passed by Democrats and signed by a Democrat President. It had not one supporter from the other half of the government.

  • horse

    To halt the intrusive influence of the government spreading from Washington into the private lives of Americans, the remedy is simple. As a unified force, have employers abstain from sending money deemed as withholding tax to the US Treasury. That will get the attention of Congress and changes will be swift, effective, and for the first time in decades meaningful.

    • south florida tom

      The Affordable Care Act is law. You don’t have to like it, obey it or move to another country. If you don’t like “the intrusive influence of government”, then don’t accept your social security checks if and when you receive them.

      • Bein

        Haha! Yes, don’t accept your SS checks ‘if and when’ you receive them. All that retirement money collected by the guv is gone, so good luck!

        Free market, free choice. The only thing that works on corruption.

      • Bein

        Good grief, the President isn’t obeying it. He’s granted exceptions and waivers to businesses, Congress, the IRS, the ‘connected’ and who knows who else all over the country. Just the ordinary people don’t get special treatment.

        This President has made a habit of choosing the laws he’ll enforce. We were a country of equal protection under the law. Not any more.

  • rachel

    Hourly employees are sometimes not considered to have “fixed income”…they may still be eligible for the health Exchange if their income deviates week to week, thus making it hard to determine if the employer offers “affordable insurance.”
    In New Hampshire, they have one insurer, Anthem, offering insurance on the Exchange, Anthem has opted to only include app. 1/2 of the hospitals in the state in the exchange.
    I will lose my doctor, specialist because the hospital they have admitting privileges to is not included.
    Also, the new plans are about 30% higher because of the 10 mandatory “free” benefits, the Silver and Bronze plans either pay nothing for anything until you meet deductable (5500 for medical, 5500 for prescription) or allow you 2 or 3 visits with your doctor (not specialists) for a $35 or $40 co-pay and then you pay full price until deductables, co-insurance, out of pocket.
    I live about 50 miles from the great Boston hospitals…NH Anthem won’t allow those who buy on the NH Exchange access to them.

    • Bein

      Oh, my. You mean fewer choices in providers means higher prices and less coverage? Who could have known that?!

  • brandy

    Obamacare was passed by bribing and pressuring Democrats, on a strictly party-line vote (not 1 republican vote) and the executive branch and both houses of congress are exempt from it. It is designed to put insurance companies out of business leaving no choice but to end up on government-run “healthcare”, i.e. – Medical/Medicaid.
    If we didn’t have Obama as president we wouldn’t have to have kids on our healthcare until they are 26. They could have a job and support themselves, including having their own healthcare.
    Just wait until you get dumped off of your healthcare plan or your rates go sky high, because they surely will. You can’t add another 18 million people to the healthcare system and cover pre-existing conditions, and demand that all plans cover everything, without rates getting so high that no-one can afford to pay them. The only option left will be Medical – long waits, unable to find a doctor, horrible care. Oh, and death panels? You bet! According to Donald Berwick, head of Medicare and Medicaid (Obama bypassed senate confirmation to make a recess appointment in 2010), “The decision is not whether we will ration care – the decision is whether we will ration with our eyes open.”
    The people that voted for Obama are ignorant and short sighted. While other Socialist countries are moving away from that because it is a colossal failure, we are not marching, but running towards it. We have taken a health care system that was the envy of the world and turned it into a socialist nightmare.
    Thank you Obama supporters.

  • Brandy

    Read Rachels post! She’s right on target. WELCOME to Obamacare folks!

  • Brandy

    Absolutely “horse”! Cut off the head of the beast ($) and we’ll get their attention. That’s the only way.

  • Nayrod

    Awesome, thanks

  • Knowitall

    ACA is so imperfect due to concessions to GOP when it was written. So, once again, stupid resides on the “right side.” Always looking for a fight they can’t win but can certainly hack up into a mess and then claim, “See, told ya!”

    As for NH, Rachel, isn’t your motto Live Free OR Die? Universal Health Care in MA, aka Romneycare, works swell.

    • Bein

      Brother…another robot. Can you give us examples of the GOP concessions that ruined the law?

      • kyle

        Bein, he probably means no single-payer. That’s the party-line. “Yeah, we know this sucks. What we really wanted was single-payer, but The Republicans made us enact this instead.”

        • Bein

          Could be.

          Stinkin’ Republicans! If only we had one party Democrat rule in the House, Senate and White House again, like the good old days of 2008 to 2010, when this terrible law and all it’s attending taxes, fees, fines, penalties, rules, regulations, bribes and and kickbacks was enacted.

    • rachel

      If you live in Massachusetts and need to purchase health insurance on the exchange, you now will be be buying a plan in compliance withe ACA…romneycare is superceded by federal law.
      The hardest part of all this is anticipating what you’ll make the next year. Like now, I have to figure out our family income for 2014 in order to see what i’ll be charged on the exchange or if i’m eligible for a subsidy.
      Now, in 2015, when I file my income tax report for my 2014 income, if I made more than I thought I was going to when I filled out the application in october of 2013 and got a subsidy, no problem…you get a nice big fine and i’m not exactly sure if you have to pay back the extra subsidy.
      It’s ok, though, the irs will help me figure it out…
      The saddest part to me out of all of this is the people who can only afford thebronze plan will get stuck with high deductables and 40% copays…the least able to afford it, so how many will still not get timely medical help because of cost?

      I hope it all works out as intended…just wish I could keep my doctor and hospital.

      • Bein

        Don’t sign up. The law is terrible and civil disobedience is one way to deal with it.

    • brussellky

      Considering they got no Republican votes, giving concessions obviously makes them idiots. Why would anyone with a brain give concessions and get nothing in return?

  • Mimi Hunter

    Should wait until we see how it actually works before deciding who’s stupid.

    • brussellky

      Exactly! These name callers usually call names because they are incapable of an intelligent debate.

  • Mimi Hunter

    I think it’s another government program that doesn’t work quite like it’s supposed to. That may be a good thing or a bad thing. It’s too early to tell.

  • gg

    Thank you for the information. It certainly doesn’t sound as horrifying as some politicians are making it.

  • dm_williamson

    If they can’t hire someone to making a working website then you are dreaming if you think the government can make the AFCA an improvement for the majority of the population. By the way, if you are old enough to have the responsibility to vote, you should be responsible for your own healthcare, not your mommy and daddy,

    • Bein

      Yes, I think raising the voting age to 26 is an excellent idea.

      • kyle

        And the drinking age.

  • ASL

    Good information, Ray. Thanks for using your resources to help inform the industry. The ACA certainly needs some improvement, but it’s a well intentioned law that will have more long term benefits than cons.

    • Bein

      Well intentioned for the the insurance companies who will make a fortune from it, and the politicians who will profit from it.

      • brussellky

        The Democrats certainly won’t profit from it when, as Kyle above points out so well, this is odds-on to collapse.

        • Bein

          Well, some Democrats have profited from it already. The website alone was billed to taxpayers at $635 million dollars. So far.

          • brussellky

            I stand corrected. I did not factor in the corruption. Thank you for bringing that to my attention.

  • Ron Crookham

    And how is this related to horse racing ? A thinly veiled political statement, Incredible !!

    • turffan

      There is much more to racing than watching pretty ponies run in a circle & handicappers cursing take-out while throwing losing tickets on the ground.
      Ray does a great job covering the industry, the entire industry.

    • kyle

      Go easy, Ron. It could have been very informative. It could have posed the question: If you’re a healthy 30 year-old should you pay $300/month for a plan with a $4000 deductible that covers only 60% of your health care costs? It could have then gone on to explain that if you and your cohorts don’t buy in the whole plan collapses. Perhaps it could have explained the reason why our subject will be paying so much for such a poor plan is that he is subsidizing the older and sicker population and the plan, by law, has to cover a bunch of services he’ll never use. I know, it still seems out of place on a racing site, but at least that would have been fun and useful.

      • brussellky

        You hit the nail on the head Kyle. There is no way the enough of the 30 year olds you described will go for this. It will collapse. This is what happens when you have people with no business experience designing a scheme such a this.

      • Bein

        Well, as long as the 30 year is male, and is going to be covered for maternity it’s alright.

    • AngelaFromAbilene

      You obviously failed to read the article. “How is this related to horse racing?” Becasue it takes trainers with employees to fill a card. Trainers are employers and assistan trainers, shedrow foremen, grooms, hotwalkers and excersice riders are employees. Those employees are now going to have to have insurance. Many of us in the Ag industry and horseracing are wondering the “what, when & hows” of the ACA as it relates to us. Especially how seasonal workers are to be counted and covered. So how ’bout before spouting off, you disengage your fingers and engage your brain and READ the damn article.

  • Penguin ymous

    Thanks for the information, Ray. Please do a follow up in 3 and 6 months.


  • Hossracergp

    Not for nothing, those that work at the track day in day out have had very little access to any type of preventive health care. ACA might be better than nothing at all. Time will tell.

    • Bein

      Everyone has access to preventative healthcare. It’s no different than having access to groceries, or a car, or a vacation or every other thing that is purchased in this economy. You make an appointment with a doctor, you pay him, done. You must mean that if someone else, like an insurance company, isn’t going to pay for your healthcare, then you don’t have ‘access’?

  • Ben Hogan

    Irregardless of which party you are with the fact remains that the government cannot run anything like this efficiently.The aca was crammed down the publics throats by a democratic controlled congress and Obama had to bribe and coerce his own party members to get the votes to do it.I think this is Obamas first great step to bankrupt the country and put it so far in debt that it will take numerous new taxes to regain the loss economically.Then what you will see is a new federal sales tax much like they have in Canada and Europe that pays for their health care.Obama has said all along he loves the European model where the govt. controls health care ,college education, retirement benefits and they should all be free to the poor and paid for by the rich.So open your wallets.

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