CRYSTAL LAKE – Never has $63 looked so daunting to Robert Ivetic.
Ivetic, director of human resources for McHenry County, is preparing for changes to the health care law coming in January as part of the Affordable Care Act.
It’s not the premiums or deductibles that has Ivetic concerned, but one $63 fee that will affect all businesses and public bodies.
While the government has pushed back by a year the so-called “employer mandate,” which was to take effect in 2014 and would have required all businesses with more than 50 full-time equivalent workers to offer them health insurance or pay a penalty, other requirements remain.
Ivetic said starting in January businesses and public bodies must pay a $63 transitional reinsurance fee for every person covered – including dependents – to help stabilize premiums in the individual health insurance market for those with pre-existing conditions.
With more than 1,000 employees in McHenry County government, the total annual cost could get in the $150,000 range when dependents are considered.
“I think the biggest concern for everyone is the reinsurance fee,” Ivetic said. “For the county you could have 2,500 employees and dependents, and at $63 per person, that’s quite a bit of money.”
Public bodies will be regulated with the same standards as businesses under the new health care law, including the requirement for agencies with more than 50 full-time employees to provide insurance.
Though the standards are the same, some challenges will be more prevalent in the public sector, said Dave O’Hara, a benefit consultant at Fringe Funding.
O’Hara, who is working with School Districts 47, 200 and 155 among others in McHenry County, said one immediate challenge has been classifying employees when it comes to the 30-hours-per-week requirement that triggers coverage. He said school districts have many employees who do not work traditional weeks, which makes it more of a challenge.
“I don’t think the idea is to cut hours,” O’Hara said of the district’s review of payrolls. “It’s just trying to identify who will be eligible.”
The bigger problem could come in 2018, O’Hara said, when the “Cadillac tax” kicks in.
The “Cadillac tax” is a 40 percent tax on health insurance plans that cost more than $10,200 annually for individuals and $27,500 for families. It could be an issue at school districts and other public bodies where expensive insurance plans are more commonly negotiated for in exchange for lower wages compared with private sector counterparts.
Plans that exceed the threshold could cost districts millions in penalties.
“We’re definitely keeping our eye on the ‘Cadillac tax’ impact, which is four years or so down the road,” O’Hara said. “We don’t want issues with that tax, so we’ll see if it stays a part of the law or if there are more changes.”
Municipalities such as Crystal Lake may not have as difficult of a transition.
Ann Everhart, director of human resources for Crystal Lake, said the city’s inclusion in a consortium helps expand the pool and provide more informational resources to stay updated on all the changes to insurance policies.
“The pool has been very proactive in getting ahead of these changes,” Everhart said of the consortium. “When it comes to getting information, we have more resources than a smaller employer.”