For a school system that is already strapped for cash, Obamacare is a budget-buster.
When the mandate does go into effect, the district can either not offer coverage and pay $2,000 per employee annually, or provide coverage but pay a penalty for any qualified employee who uses the exchange the act requires states to establish, where individuals and businesses can select affordable plans.
This comes from the Suffolk News Herald. Ms. Wendy Forsman has been in charge of making sure the Suffolk Public School system is in compliance with the Affordable Care Act, AKA Obamacare. You remember, the bill we had “to pass, so we could find out what was in it.”
The cheapest option would be for the school system to drop coverage & pay each employee 2 grand a year to find their own coverage. Problem is, 2 grand doesn’t even begin to cover the cost of health insurance, especially not for a family. Losing that benefit will surely drive most of the teachers in our school system away, and make it very hard to attract new, quality teachers. That is precisely why the school system has chosen the other option, despite it’s high cost, and potential for fees:
Suffolk Public Schools appears to be going with the “play” option, requiring it to offer insurance covering at least 60 percent of average medical costs to employees working at least 30 hours per week for at least 90 days, Forsman said.
Also, the cost of coverage for employees making less than four times the federal poverty line cannot exceed 9.5 percent of their household income, and that poses the greatest risk for the district penalty-wise, Forsman said.
“We have no way of determining household income, so we have to look at individual income and assume that’s all they have,” she said.
If the assumption is wrong, the penalty kicks in.
“If we offer insurance and the employee goes to the exchange and are eligible for the exchange, we have to pay $3,000 as a penalty,” Forsman said.
On top of that, there is the problem of part-time employees (AKA Substitute Teachers). If any part-timer creeps over 30 hours a week, the school system could be in trouble for not providing them with benefits. The solution: a whole lot of subs are going to find their hours cut.
The requirement to extend coverage to all employees working 30 or more hours a week, known as “fair access,” also could be problematic when it comes to substitute teachers, whose hours can creep above the threshold.
The district has taken steps to ensure employees working 30 or more hours a week and exceeding the income threshold are getting coverage, Forsman said.
Software handling substitute placements can also be set to ensure employees don’t exceed 29 hours, she said.
“We feel like we are in a good position to not pay that penalty,” she said.
But the kicker is, even with all these steps, the school system will have to pay $180,000 in fees to the Federal Government, on top of the costs of implementing all the changes, and ensuring the penalties don’t kick in:
Despite its efforts to avoid penalties, the district will still have to pay Transitional Reinsurance and Insurance fees to the Department of Health and Human Services, and Patient Centered Outcomes Research fees to the IRS, with an estimated annual cost of $172,500 and $5,476, respectively.
And that doesn’t even account for the cost of staff time to implement all these changes and keep track of everything to avoid penalties.
It will also have to devote extra staff time generating several employee notices about the new options, Forsman added.