The document discusses how the Affordable Care Act impacts farm families as both consumers and employers. As consumers, farm families now have access to health insurance options on the marketplaces as well as subsidies. As employers, farms with 50 or more full-time equivalent employees will need to provide adequate and affordable health insurance to workers or pay a penalty, though most farms will be exempt from this mandate. The document provides details on the health insurance marketplace, available plans, subsidies, and penalties under the employer mandate.

1. The Affordable Care
Act and Farm Families
Barbara O’Neill, Ph.D., CFP®
Rutgers Cooperative Extension
oneill@aesop.rutgers.edu

2. Two Affordable Care Act (ACA) impacts on farm families:
 As consumers who making health care decisions for their
families
 As employers of farm workers
• Migrant workers (travel frequently between job sites)
• Seasonal farm workers (local temporary labor force)
• Year-round farm workers
Farm Families and Health Care

3. • Farmers/ranchers are more likely than the U.S. population
as a whole to have health insurance
• Farm work is hazardous; many occupational injuries
• Many relied on individual policies
– Few group options previously
– May have used a high-deductible policy paired with a HSA
• Marketplaces offer new insurance options with lower
premiums because it is no longer legal to charge anyone
(including farmers) for any pre-existing condition or risks
associated with a higher risk occupation (such as farming)
Farm Families and Health Care

4. Insurance companies must take every eligible
applicant seeking insurance without regard to
health status (guaranteed issue)
• No more exclusions for consumers with pre-existing
conditions
• No more cancellation of policies for being too sick
• No more lifetime maximums on the amount paid for
care for essential benefits
• No more annual maximums on the amount paid for
care for essential benefits
The Consumer Protections

5. Essential Health Benefits
Qualified Health Plans in the Marketplace must cover:
Ambulatory patient services Maternity and newborn care
Emergency services Prescription drugs
Mental health and substance
use disorder services
Laboratory services
Rehabilitative and habilitative
services and devices
Chronic disease management
Preventive and wellness
services
Pediatric services, including oral
and vision care

6. •Consumers are mandated to purchase insurance
•Creates Marketplaces where consumers can choose
among affordable plans, offering subsidies to some
•Builds on current employer-employee fringe benefit
insurance arrangement and mandates large employers
to offer adequate and affordable plans
•Intended to expand states’ Medicaid programs to include
all individuals and families under 138% FPL ($15,856 for
individual, $32,499 for family of four)
ACA Goal: Decreasing the Number
of Uninsured Americans

7. • Individual Mandate: “Everyone must have a health
insurance plan starting in 2014…..or pay a federal
government penalty” (certain exceptions apply:
http://www.irs.gov/Affordable-Care-Act/Individuals-and-
Families/ACA-Individual-Shared-Responsibility-Provision-
Exemptions )
• Employer Mandate: “Employers (including farms) must
offer their workers adequate and affordable insurance if
they have 50 or more employees, including seasonal ones,
working 30 hours a week for more than 120 days…..or pay
a federal government penalty”
ACA “Pay or Play” Rules

8. Employed based insurance is deemed affordable if
the annual premium for a self-only plan (not a
family plan) costs less than 9.5% of a person’s
annual household gross income (safe-harbor rule:
use an employee’s W-2 Form income)
http://www.shrm.org/hrdisciplines/benefits/articles/pages/what-is-affordable-coverage.aspx
Insurance Affordability

9. Insurance is deemed adequate if it is a 60/40 plan.
That is, no more than 40% of the total health care
costs in a year would be expected to be paid by the
average person insured in this type of plan. Many
employer-provided plans were 50/50 or even less.
Insurance Adequacy

10. • Effective March 31, 2014, Americans must be enrolled
in a health insurance plan
• With few exceptions, if you are not insured, and your
income is over 138% of the FPL, you will be required
to pay a penalty (tax) on income tax return
– Penalty for no coverage will rise from $95 for adults
or 1% of family income, whichever is greater
(2014), to $695 or 2.5% of family income… (2016)
http://kff.org/infographic/the-requirement-to-buy-
coverage-under-the-affordable-care-act/
ACA for Consumers: The
Individual Mandate

11. • Children are also required to be insured. May be
through
– Public insurance (e.g. state’s Children’s Health Insurance
Program or CHIP) or
– Parents’ obligations (via employer plan or private purchase);
Fines for uninsured children are half that of the adults up to a
family maximum ($285 for 2014, $975 for 2015, and $2,085
for 2016)
• ACA tax is assessed on federal income tax return
– May need to adjust estimated payments and/or W-4
ACA for Consumers: Individual
Mandate (Continued)

12. • Lowest income residents (< 138% of FPL) will be enrolled
in Medicaid (legal residents only) in expansion states
• Higher income workers can get coverage through
– Medicare (age 65+)
– Large employers (farm or off-farm employer)
– State health insurance marketplaces (see
www.healthcare.gov)
– Private market (e.g., insurance brokers, health co-ops)
More ACA Consumer Provisions

13. • Marketplaces are managed either by the state or federal
government
• People can get help applying:
o https://localhelp.healthcare.gov/
• 2015 Open enrollment period: 11/15/14- 2/15/15
• Qualifying life events are reasons for enrolling out of usual
schedule (special enrollment)
https://www.healthcare.gov/marketplace-deadlines/2015/
Health Insurance Marketplace

14. Different Levels of Plans
• 4 Levels of Coverage – Bronze, Silver, Gold, and
Platinum
• Each has a different value for level of coverage
• Bronze: 60%. Silver: 70%. Gold: 80%. Platinum: 90% (adequacy
values, how much plan vs. insured pays)
• Any costs not covered by the plan are paid by individuals through
deductibles, co-pays, co-insurance
• Each plan level must cover same minimum essential health
benefits
• What differs is amount of cost-sharing required
• Example: Bronze plan will have the least generous coverage (60%)
with more out-of-pocket costs

15. Health Insurance Subsidies
Two provisions to lower health insurance premiums and
out-of-pocket costs for LMI households
• Premium Tax Credits- Help people pay monthly cost of
having a Marketplace plan; based on family size and
household income from 100% (138%) to 400% of FPL
• Cost-Sharing Reductions- Decrease the charges that
people having a Marketplace plan must pay OOP for
deductibles, copayments, and coinsurance; must have
income up to 250% of FPL and be enrolled in a Silver plan

16. ACA Benefits for Farm
Families as Consumers
• Some families with incomes low enough to qualify for
Medicaid or tax subsidies have a high net worth (median
net worth of farmers is 5x U.S. median net worth)
• The ACA does NOT have an asset test; only income and
family size are considered
• Lack of an asset test is a significant advantage for farm
families with low cash incomes
• Farmers often have flexibility to manage taxable income
(i.e., timing receipt of income and capital expenses)
• Farmers may qualify for benefits that were previously only
available to low income/low asset households

17. What Does the ACA
Mean for Farm
Owners as
Employers?

18. • Sole proprietors are considered “individuals” and are
subject to ACA individual mandate
• Can shop for coverage for farmer/family in state
Marketplace or privately
• Will probably have substantial cost savings in
Marketplace vs. policies offered in private health
insurance market
– Especially with available government subsidies
Sole Proprietorships

19. • American Farm Bureau: “The vast majority [of farm
owners] likely won’t have to offer insurance”
• Department of Health and Human Services: “96% of all
businesses will be exempt from the law”
• Only 0.2% of U.S. businesses with 50+ employees did not
already provide health insurance to FT employees
http://www.forbes.com/sites/theyec/2013/04/22/is-the-affordable-care-act-really-
bad-for-business/
http://farmdocdaily.illinois.edu/2014/09/small-farms-and-the-aca.html
http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2014/rwjf413248
ACA Employer Mandate

20.  Small employers (< 50 FTE) are not mandated to offer health
insurance to full-time employees
 But their workers may be mandated to purchase coverage and
may likely do so with subsidies in the Marketplace
 If employers offer insurance, must be offered equally to everyone
 SHOP (Small Business Health Option Program) Exchange
available for small employers
 For 2015, SHOP Marketplace is open to employers with 50 or
fewer full-time equivalent employees (FTEs). By 2016, those
with 100 or fewer FTEs can use the SHOP
 90 day waiting periods are allowable for new employees
ACA Employer Provisions

21. Small Business Health
Care Tax Credits
All of the following must apply:
• Fewer than 25 full-time equivalent (FTE) employees
• Average employee salary is 50,000 per year or less (inflation indexed)
• Employer pays at least 50% of full-time employees' premium costs
• Employer offers coverage to full-time employees through SHOP
Marketplace: https://www.healthcare.gov/small-businesses/provide-shop-coverage/small-business-tax-credits/
Tax credit is worth up to 50% of contribution toward employees'
premium costs (up to 35% for tax-exempt employers).

22. • 10 employees
• Total of wages: $350,000 (@$35,000 per worker)
• Employee health care costs: $100,000
• 2015 health insurance tax credit: $50,000
($100,000 x .50)
Tax Credit Example:
Small Dairy Farm

23. • Penalty for not providing any health care coverage
– $2,084 per year for each full time worker minus 80 (30 in 2016)
– Example: 100 employees: 100 – 80 = 20 x $2,084 = $41,680 per
year penalty for not providing coverage; paid monthly ($2,084/12)
– Penalty will increase with rising insurance premiums
• Penalty for not providing affordable and adequate
health care coverage
– If any employee has to pay > 9.5% of income for employer’s
coverage AND/OR
– If coverage does not pay at least 60% of covered health care
expenses
– $3,126 per year for each full time employee receiving a premium tax
credit or cost-sharing reduction starting at worker #81(#31 in 2016)
– Penalty will increase with rising insurance premiums
Two Potential Penalties
JANUARY 2015: 100+ Workers (70% Coverage)
JANUARY 2016: 50-99 Full-Time Workers

25. • Vast majority of farms have < 50 full time employees but
many have seasonal workers
• Need to determine if you average 50 FT employees for >
120 days in prior year
• If you do, you are required to offer coverage
Calculators:
http://www.franchise.org/healthcare/calculator.aspx
http://www.retailmeansjobs.com/health-care-calculator
Seasonal Employee Rules

26. • Not offer insurance at all and pay a smaller
fine
• Make sure insurance that is offered is both
adequate and affordable to comply with ACA
Large Employer Options That
Make “Business Sense”

27. But, Keep in Mind…
• More than three-quarters (78%) of 2.1 million U.S.
farms do NOT hire labor (Ahearn et al., 2014)
• Rather, labor is provided solely by family members
• For these farmers, obviously, the ACA employer
mandate does not apply
• The only way family farms are affected by the ACA is
by the individual mandate to have health insurance
http://www.ers.usda.gov/amber-waves/2014-march/family-
farming-in-the-united-states.aspx#.VM_qs02_yM8

28. • Undocumented immigrants aren’t eligible for ACA
coverage through marketplaces
• Most seasonal farm workers and their families are
uninsured
• Barriers: cost, language, transportation, no sick leave
• Farmworkers may have better access at least to safety
net providers (e.g., community health centers that are
being better funded through ACA)
Resource: National Center for Farmworker Health:
http://www.ncfh.org/
Farm Workers and Health Care

29. • Compare health insurance options including ACA
• Monitor income/expenses to qualify for subsidies
• Consult a professional advisor if business is close to or
above 50 FTE employees
– Do the math: pay or play?
– Develop a plan to optimize mandate requirements within your
business model (e.g., more part-time, less full-time, limiting
surges of workers to < 120 days)
• Obtain adequate and affordable health insurance if you
decide to cover employees. Make sure it both:
– Meets the 60/40 rule
– Costs less than 9.5% of your least (lowest) paid employee’s
annual (household) income.
Action Steps for Farm Families

30. Research-Based Journal
Article
http://aepp.oxfordjournals.org/content/early/2014/09/30/aepp.ppu030.short
Ahearn, et al. (September 2014). Implications of
Health Care Reform for Farm Businesses and Families.
Applied Economic Perspectives and Policy, 1-27.
Abstract: The Affordable Care Act has implications for the source of
health insurance for farm households and potentially how much of their
time they allocate to off-farm jobs and even the rate at which new
operators enter farming. The Act will likely have impacts for the 1% of
farms defined to be large employers, which are required to provide
coverage for their workers or pay a penalty. While a very small share of
all farms, they account for upward of 40% of the production for some
commodities. How they adjust their use of farm labor in response to the
Affordable Care Act has implications for farm structure.