This document summarizes a presentation on health care in the workplace. It discusses the history of employer-provided health insurance in the US and key provisions of the Affordable Care Act (ACA) including the individual mandate, employer mandate, and potential economic impacts. It also shares preliminary results from a survey of Virginia business leaders which found most were concerned about rising health care costs and expected the ACA to negatively impact their businesses. Current policy debates around defining full-time work under the ACA are also covered. Helpful online resources on ACA implementation are provided.

1. Health Care
in the
Workplace
DR. ALICE LOUISE KASSENS
JOHN S. SHANNON CHAIR OF ECONOMICS
ROANOKE COLLEGE
The Management Institute
April 2016

2. Learning Objectives
By the end of the session, participants will be able to:
▪ Discuss the major sections of the ACA
▪ Know the resources available for navigating the ACA
▪ Understand the potential economic impact of the legislation on
individuals
▪ Understand the potential economic impact of the legislation on
businesses
▪ Understand the potential economic impact of the legislation on the
economy

3. History of health
insurance and the
employer
When did employers begin offering as a
benefit?
Has the distribution of total compensation
changed in the last few decades?

4. History of health insurance and the employer
▪ Emergence of employer based
health insurance with WW II
WHY?
▪ Growth through 1980s
▪ Decline of 6.3 percentage points
over 1987-2004 period
▪ Plateau with minor drop in Great
Recession
What do you think were the drivers
behind these trends?

5. History of health insurance and the employer
0
10
20
30
40
50
60
70
80
90
100
%
All workers Part-time workers Full-time workers
Percentage of workers with access to employer-provided health insurance, private industry, 1991–2012
GROUP CHAT:
Why do you think
coverage for part-time
workers is less than
that of full-time
workers?

6. History of health insurance and the employer
Group work:
Get into groups and make the following lists:
1. Benefits of employer-based health insurance
2. Consequences of employer-based health insurance
Group question:
Would it be ideal to remove the link between employment and
health insurance? Why or why not?

7. PPACA
What are the major pieces of the
legislation?
What resources are available?

8. PPACA Overview
▪ Individual mandate
▪ Employer mandate
▪ Affordable Care Organizations
▪ Medicaid expansion
▪ Community rating
▪ Essential minimum benefits

9. Individual
mandate
What are the rules?
What are the potential economic impacts
for individuals?

10. Individual mandate
▪ Beginning in 2014, all individuals must buy health insurance with
essential benefits (minimum essential coverage)
▪ Self-employed individuals can get health insurance through the
state exchanges just as any other individual
▪ If do not buy health insurance, face a penalty (unless have an
exemption)
▪ Penalty is the greater of:
▪ $95 or 1% of household income over the filing threshold in 2014
▪ $325 or 2% of household income over the filing threshold in 2015
▪ $695 or 2.5% of household income over the filing threshold in 2016

11. Individual mandate

12. Individual mandate – penalty example
▪ Suppose you are single without
children and earn $40,000 per
year.
▪ The filing threshold for 2016 for
single individual is $10,300
▪ The amount over the threshold is
$40,000 - $10,300 = $29,700
▪ 2.5% of this is ~$742.50
*Not eligible for tax credit*
*Economic consequences?*
Pay $742.50 in penalty or at least
$2868 per year in premiums
What
would
you do?
Sample plan (2016, lowest premium)
NOTE: Plan estimate for female in Roanoke County, single, no dependents, 40 years old, non-
smoker, expected income $40,000

13. Employer Mandate
What are the rules?
What are the potential economic impacts
for businesses?

14. Employer mandate overview
▪ Beginning January 1, 2016 employers with 50-99 FTE employees
MUST offer health insurance that is:
▪ Affordable
▪ Offers minimum essential coverage
OR
▪ Pay a penalty
▪ If less than 50 FTE, not penalized if do not offer
▪ This is a delay in the employer mandate; employers with 100 or
more workers began January 1, 2015
“Pay or play” mandate

15. Employer mandate
▪ Employers must provide at least 60% of premium costs of employees health
coverage
▪ Health coverage purchased for an employee cannot exceed 9.56% of their gross
family income for employee only coverage.
▪ Employers must insure their employees if they have over 50 full time workers or
they will face a penalty or "shared responsibility fee".
▪ The penalty for large businesses not covering their workers is $2000 per
employee and $3000 if they purchase health insurance through the exchange
with premium credits
▪ The first 30 workers are excluded from the penalty.
▪ High end insurance plans will be subject to a 40% excise tax.
▪ Employers with less than 25 full-time workers making less than $50,000 a year
may be eligible for cost assistance via premium tax credits.
Affordability
Penalties

16. Employer mandate
▪ Minimum essential benefits:
▪ ambulatory patient services;
▪ emergency services; hospitalization;
▪ maternity and newborn care;
▪ mental health and substance use disorder services, including
behavioral health treatment;
▪ prescription drugs;
▪ rehabilitative and habilitative services and devices;
▪ laboratory services;
▪ preventive and wellness services and chronic disease management;
▪ pediatric services, including oral and vision care

17. Employer mandate
2015
Although firm
size determined
by FTE, penalty
is only assessed
on full-time
workers (30+
hours per week)
2016

18. Employer mandate
Acme Industries, a small manufacturing firm, does not currently offer
coverage to its 35 full-time employees and 20 part-time employees. The
company’s part-time employees work 24 hours per week. One of Acme’s
employees, Dave, is between 100-400% of the federal poverty level. Given
the facts, what will the employer mandate mean for Acme?
Example 1

19. Employer mandate
Yes

20. Employer mandate
Yes

21. Employer mandate
$10,000

22. Employer mandate
Try the examples on the handout.

23. Employer mandate
Determination and application of employer penalty by type of employee
Retrieved from http://www.fas.org/sgp/crs/misc/R41159.pdf 11/13/2013
What types of
incentives might
arise?

24. Employer mandate (less than 50 FTE)
Choices for “small employers”:
1. Are not penalized if do not offer  point employees to individual
exchanges (www.healthcare.gov)
2. Employers can buy health insurance from Small Business Health
Options Program (SHOP) for 2015 (SHOP opened Nov. 2014)
▪ An online exchange (much like the exchange for individuals)
▪ Could quality for tax credits to offset costs (not permanent); can deduct
remainder from taxes
▪ Way of attracting new employees  increased total compensation?
3. Work with insurance company/broker to buy group coverage in
private market (nothing new)

25. Employer mandate – more on SHOP
▪ Open to employers with 50 or fewer FTE employees
▪ In 2016 this increased to those with 100 or fewer FTE employees
▪ Self-employed can use individual exchange, but not SHOP
▪ If offer through SHOP, must offer to all FT employees (30 or more hours
per week)
▪ In many states, at least 70% of your eligible employees must enroll in
your SHOP plan
▪ Employees sign up using the SHOP webpage after you have selected a
plan
▪ Coverage will not take affect until approved by employer after enrollment
period is over

26. Employer mandate
Group questions:
1. What do you think are the primary concerns for employers with
respect to the employer mandate?
2. Have you observed any changes in your place of work?
3. Do you believe that your employer will be impacted by the
employer mandate?
4. How do you think your employer will adapt to the employer
mandate?

27. 5 minute break

28. Virginia Business
Leaders Survey
What are Virginia CEOs saying about the
impact of the ACA?

29. Virginia Business Leaders Survey
▪ Survey started in 2015, just started compiling results (preliminary)
▪ Survey of Virginia CEOs of private businesses with at least $5
million in sales (around 2800 once we eliminated doubles)
▪ Mail and electronic
▪ Response rate ~ 11%
▪ Asked CEOs a variety of questions about overall economy and their
industry
▪ Included some questions pertaining to health care

30. Virginia Business Leaders Survey
Take a few minutes to complete the selected questions. If you are not
currently a CEO, answer as if you are.
Share your answers with your neighbors. Discuss differences and
similarities.
*Do not discuss questions/answers that you feel are too personal.*
*I will not collect these answers.*
CLASS WORK:
I will share some of the preliminary results when you are finished.

31. Virginia Business Leaders Survey
Now thinking about the people that work for your
company, do you intend to substantially increase,
moderately increase, keep about the same, or
decrease your workforce between today and the
end of 2016?
2.0
33.7
57.5
6.9
Substantially
increase
Moderately increase
Keep about the
same
Decrease

32. Virginia Business Leaders Survey
Now thinking about other challenges that your
company faces, which of the following are you
concerned with?
0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0
Existing US competition
Governmental regulation
Taxation
Foreign competition
Energy costs
Risk management
Adverse economic conditions
Health care costs
Global political instability
Sequestration
Rising supplier costs
Human resources
Cash flow
Availability of equity financing
Ability to obtain suitable financing
%
Concerned about health care costs, # employees
0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0
Less than 50
50 or more
Less than 30
30-99
100 or more
All
%

33. Virginia Business Leaders Survey
For each of the following national proposals,
please indicate whether you support it or oppose it.
Repeal the Health Care Reform Legislation,
# employees
66.5
77.2
59.7
78.4
31.1
24.0
11.1
20.1
12.0
45.5
9.5 11.7
20.1
9.6
23.4
0
10
20
30
40
50
60
70
80
90
100
Repeal the
Health Care
Reform
Legislation
Pass a Balenced
Budget
Constitutional
Amendment
Increase
Federal
Spending on
Infrastructure
Reduce the
Corporate
Income Tax
Rates
Lessen
Corporate
Income Tax
Deductions
Support Oppose No Opinion
67.2 65.0 65.4 68.1 66.7
22.7 26.8 22.2
26.6 24.6
10.1 8.3 12.4
5.3 8.8
0
10
20
30
40
50
60
70
80
90
100
Less than 50 50 or more Less than 30 30-99 100 or more
Support Oppose No Opinion

34. Virginia Business Leaders Survey
Thinking specifically about health care and the ACA,
do you expect it to have a positive impact on your business, a
negative impact, or no real impact?
8.9
72.4
18.8
Positive
Negative
No impact

35. Virginia Business Leaders Survey
Have you made any of the following adjustments
due to the ACA?
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
Increasing
benefits to
retain
employees
Decreasing
benefits to cut
costs
Offering defined
contribution
health
insurance
Hiring more
part-time
employees
Reducing the
number of
hours current
employees work 18.5
37.3
29.6
26.4
20.1
28.7
35.8
36.0
31.9
28.0
20.5
33.3
24.8
26.0
22.8
21.1
40.4
41.3
26.6
16.8
26.4
40.0
33.3
36.4
32.1
Increasing benefits to retain employees
Decreasing benefits to cut costs
Offering defined contribution health insurance
Hiring more part-time employees
Reducing the number of hours current
employees work
Less than 50 50 or more Less than 30 30-99 100 or more
Adjustments due to the ACA, # employees

36. The economy
What are the potential economic impacts
of the legislation on the economy?

37. The economy
Labor market effects

38. Current issues
What are the current issues being
debated?

39. Current issues
Definition of full time work:
30 vs. 40 hours per week
Save American Workers Act 2015
HR 30 passed in January 2015
American Job Protection Act 2015
S 305 assigned to committee January 29, 2015 (1% chance
of being enacted)
Group question:
7% of American workers work 30-34 hours per week while
44% work 40 hours per week.
What are the costs and consequences of redefining full time
work under the ACA?

40. Helpful resources
http://www.kelleydrye.com/publications/client_advisories/1007
https://www.irs.gov/Affordable-Care-Act/Employers/Questions-and-Answers-about-Information-Reporting-by-Employers-on-Form-1094-C-and-Form-1095-C
http://www.ncsl.org/research/health/states-pursue-health-compacts.aspx
https://kaiserhealthnews.files.wordpress.com/2011/01/healthref_goldbergls10.pdf
http://services.dlas.virginia.gov/User_db/frmView.aspx?ViewId=3191
http://bipartisanpolicy.org/wp-content/uploads/2015/11/BPC-Health-Improving-Expanding-Coverage.pdf
http://kff.org/interactive/implementation-timeline/
https://shrm.org/hrdisciplines/benefits/articles/pages/hsa-enrollment.aspx
https://www.irs.gov/Affordable-Care-Act/Employers/ACA-Information-Center-for-Applicable-Large-Employers-ALEs
https://www.irs.gov/Affordable-Care-Act/Employers/Types-of-Employer-Payments-and-How-They-Are-Calculated
https://shrm.org/hrdisciplines/compensation/articles/pages/compensation-impacts-play-or-pay.aspx

41. Thank you
Feel free to contact me –
Dr. Alice Louise Kassens
kassens@roanoke.edu
(540) 375-2428 (office)
@RnningEconomist
The PowerPoint presentation will be
available on my blog:
www.therunningeconomist.blogspot.com