Minding Ag's Business
Do the Math on Obamacare
Set politics aside and do the math on your business's options for insurance under Obamacare. Farmers are among the small business owners with one to nine employees who pay 18% more for health insurance than the nation's biggest companies, according to the Washington, D.C.-based advocacy group, Small Business Majority. That's why business consultants and health analysts who have run the numbers think many farmers will have the most to gain under health care reform. We'll know for sure when states unveil their health exchanges Oct. 1.
Analysis by the Kaiser Family Foundation and DTN's own tax consultants in the last few weeks confirm that the first 18 state exchanges could offer many farm business owners and their employees health care relief starting in 2014. In these pools, about half of the people who apply will qualify for subsidies, and that is supposed to knock about $5,500 off premiums for the typical family that qualifies, Kaiser says.
Thanks to tax credits and subsidies, many farmers will find big incentives to drop company provided insurance for themselves and employees under Obamacare, DTN Tax Columnist Andy Biebl reported in his latest column.
Biebl is a Minnesota tax partner who specializes in agriculture for CliftonLarsonAllen LLP. He says his firm has run the numbers for many small business owners in recent weeks, including restaurants and hair salon chains where workers typically earn salaries less than $46,000 a year. It's crazy but you might be doing your employees a big favor by letting the government subsidize their insurance instead of opting for expensive employer-provided coverage purchased through small group plans. Main thing to check is whether these plans include the key doctors and health care providers you need within their network.
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Very few farm employees will pay sticker price for their insurance in the new exchanges. Individuals with income as high as $46,000 and families of four with income up to $94,000 qualify for a sliding scale of tax credits that can slash medical costs.
The net result is that a 25-year-old single worker near Sioux Falls, S.D., who earns $25,000 per year would pay only $144/mo. after tax credits for "silver" coverage with a $1,500 deductible, Kaiser says. A 40-year-old couple earning $60,000 with two minors would pay $409/mo. for the same plan. Without any tax credits that same family plan would cost $790/month.
Most farmers I know are like Dick Wittman, a Culdesac, Idaho farmer who feels a responsibility to see their employees aren't bankrupted by an accident or illness in the family. Many of you tell me you'd like to continue to offer a flat price to help employees cover health insurance costs. That will be tricky in the future, thanks to a recent IRS ruling in September, Biebl says. Instead of reimbursements for insurance premiums, you could reimburse dental and vision expenses, however.
We won't know the real math until all states release their plans Oct. 1, but keep an open mind and keep studying the options. There's no rush to change your business benefits yet, but all individuals will need health insurance coverage in 2014.
For all DTN-Progressive Farmer coverage on health care reform and links to other resources, go to http://www.dtn.com/…
For more information on tax credits available through state health insurance marketplaces go to
Follow Marcia Taylor on Twitter@MarciaZTaylor.
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