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Health Care Reform Means “Pay or Play?” Choice For Employers

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Now that President Barack Obama has been elected for a second term, it looks like the Affordable Care Act is here to stay and businesses are just one group that will be impacted.

Some sources say as many as 80% of employers had been waiting to see what the outcome of the election would be before making a choice on the health care they provide to their employees.

Now, their health care choice comes down to one question... pay or play? The law states that businesses with 50 or more full-time employees need to decide if they will continue or start offering coverage, because if they don't, they'll face pricey penalties... anywhere from $2,000-$3,000 for each full-time employee they don't insure.

"There's a role for a company like ours regardless of what the employer does," says Andy Butler, who owns Butler Insurance Services, 215 N. Main Street, Davenport.

Butler says his business acts as adviser and advocate for more than 100 businesses making this "pay or play" choice. With a lot of changes expected over the next year, he's expecting an influx in clientele, counseling, and concerns.

"There's a lot of information that has to be collected that was never something the employers had to think about sharing with people," says Butler. "[For example], how many active employees are on the plan, how many aren't on the plan, what are their W2 wages, do they have access to other coverage... all of that gets thrown into this big melting pot and you come up with a number of what the plan will actually cost."

Butler says different types of businesses will differ in their decisions, but he thinks most will keep their current plans.

"The unknowns and the fears of a government program or a state-based exchange are just too significant," says Butler. "And they're not cheap."

Because of that, businesses who don't have plans in place - like some in the hospitality industry like certain restaurant chains - will probably cut hours so they have less full-time workers than the 50 required in the Affordable Care Act.

"There are a lot of part-time people, a lot of companies with seasonal employees, that are considering that and I think they're likely going to go do that," says Butler. "That will have a huge impact on a lot of people."

And it bags another question - Is the Affordable Care Act going to hurt or help the economy? It is probably an issue that will come up over the next year, but meanwhile, businesses need to decide what they're going to do by January 1st, 2014, which is when the Affordable Care Act is expected to be fully implemented.

Each individual state also needs to send in a "Letter of Intent" with what they've decided to do by Friday, November 16th, 2012. State leaders basically have three options - create their own exchange (an online marketplace of insurance plans), partner with the federal government on an exchange, or let the federal government set up the exchange for their state. As of Wednesday, November 14th, 2012, Illinois is among 15 states planning on setting up its own exchange and Iowa is among more than half of the states still undecided.