Farm families are a group for whom the Affordable Care Act can have a lot of impact — for them as individuals purchasing insurance for themselves, as business owners potentially purchasing insurance for employees and as employers managing employees who are also individuals making their own decisions.
The ACA — which many call "Obamacare" — and its effect on farm families as insurance consumers, was the subject of a statewide University of Wisconsin-Extension webinar, outlining the many ways farmers can be affected by it.
The webinar originated from the Dane County UW-Extension office and was webcast to 25 sites around the state, though some had to drop out early because of bad weather that evening. Most counties that hosted the UW-Extension information session also had specialists in their meetings to help answer any questions that arose.
Heidi Johnson, the Extension crops and soils agent in Dane County, said she felt it was important for farm families to get information on this topic. She volunteered to research the information, get experts lined up and host the webinar.
"I think this is one of the things we should do in Extension," she said. "Because it's so complicated and there are specific things that affect farmers, I wanted to do this."
Before she held the webinar (and a similar one for Dane County farm families a few weeks earlier) she said there were hours of research needed.
Johnson said that farmers are more likely to have health insurance on average. Many have insurance to "protect the farm" since a catastrophic injury can be devastating financially, she said. It may also be due to what is considered to be a hazardous work environment.
Many farm families rely on individual policies. If all Americans are considered, five percent have individual policies; but among farm families 36 percent rely on individual policies they purchase on the insurance market.
Prior to the ACA there were few "group options" for farmers. Many have relied on high-deductible policies, perhaps pared with a health savings account (HSA.)
"Of course, for many the option is to have one member of the family work off the farm for health insurance benefits," she said.
Something that "could be a big deal for farmers" in the ACA is that starting Jan. 1, 2014 there will be no more exclusions for consumers who have pre-existing medical conditions. That stipulation of the health care law is already in place for children under age 19 and goes into effect for all ages starting the first of the year.
Already in place is a requirement that policies can't be cancelled for someone "being too sick" and there are no more lifetime maximums on the amount paid for care for essential benefits.
Similarly, she explained, there will be no more annual maximums on the amount paid for care for essential benefits starting Jan. 1. Also at the beginning of 2014 many preventive care services are required to be included in policies without any co-pay.
Those include cancer screenings like mammograms and colonoscopies, vaccinations, blood pressure screening, cholesterol screening, tobacco cessation and counseling, depression screening and more. The government requires policies to cover birth control, though Johnson said there is still some controversy over that.
There are cases pending in the U.S. Supreme Court regarding those provisions.
Beginning in January, the profession of the person applying for insurance will no longer be taken into account when a quote is given.
The health care law already made the change that young adults could remain on their parent's private insurance plans until the age of 26.
Qualified health plans in the government-sponsored "Marketplace" must cover ambulatory patient services, emergency services, mental health and substance abuse disorder services, rehabilitative services and devices, preventive and wellness services, maternity and newborn care, prescription drugs, laboratory services, chronic disease management and pediatric services including oral and vision care.
One of the provisions of the new health care law is that everyone must either have insurance (play by the rules) or will have to "pay" a penalty.
Employers, which includes farms, that have 50 or more full-time employees must offer their workers "adequate and affordable" insurance or pay a government penalty.
The individual penalty for 2014, for those who aren't covered by some kind of health insurance, will be $95 per adult or one percent of their income — whichever is more.
By 2016, that penalty will rise to $695 per adult or 2.5 percent of income, whichever is more.
There are some exemptions, Johnson explained, including people with religious beliefs, membership in an Indian tribe, hardship or ineligibility for Medicaid (or similar programs) because of a state's decision not to expand.
The health care law requires that children be covered; this may come through a parent's insurance or public programs. Fines also apply for those not insuring children.
The tax will be assessed on the federal income tax return for those who don't comply. Johnson explained that people who claim one of the exemptions for not getting insurance will have to prove them to avoid paying the penalty.
For people required to have insurance, the options are employer-based private coverage, privately purchased insurance, public programs like Badger Care in Wisconsin (our name for Medicaid programs) and the "Health Insurance Marketplace."
Purchases in that "Marketplace" at www.healthcare.gov are based on federal poverty guidelines that are used to measure a person's eligibility and ability to pay. "That will drive where people fit into the programs," Johnson said.
Charts and tables are used to determine those eligibilities and where people fit into the program.
Wisconsin is in the process of changing eligibility guidelines for Badger Care because states had to make decisions based on the new health care law, she said. "Some of that is still in a state of flux right now. It is a challenge because there are so many changes."
The website for the health care marketplace had its share of problems when it was first rolled out. For Wisconsin residents the website is being managed by the federal government.
In addition to being able to sign up on the website, people can sign up for insurance over the phone through a 24-hour call center at 1-800-318-2596 or in person.
The program is designed with "open enrollment," which means there will be an opportunity each year to sign up. That period is from Oct.-Dec. 7 most years although in this first year of the program enrollment is open through March.
Johnson said that with that annual signup period it's a "terrible time for farmers" because of fall harvest and the increased workload. It has been difficult this year for farmers to sign up because of the quirky website and spotty internet service.
One of the concerns she has heard from farmers who don't have a robust internet connection at home is identity theft if they use a computer in a public place to sign up for the insurance.
Many rural residents don't have high-speed broadband connections and must go to a location like the local library to use a computer with that capability, she said.
When selecting insurance plans, there are different levels of coverage and they are named with designations that include Bronze, Silver, Gold and Platinum. Johnson explained that Bronze insurance plans cover 60 percent of the insured's costs and "the rest is on you."
Any costs not covered by the plan are paid by individuals through deductibles, co-pays and co-insurance.
So-called "catastrophic plans" will still exist, she said; they are also known as high-deductible, low premium plans. These kinds of plans would be most advantageous to people who can't afford traditional plan's premiums and for those who are healthy and don't need routine care.
The disadvantages are that these plans may not cover essential health benefits and costs for routine health care can accumulate quickly before the deductible is met.
Insurance policies purchased under the ACA are designed to limit out-of-pocket costs beginning in January to a level of $6,350 for an individual and $12,700 for a family. This applies to co-payments and deductibles but not to premiums for the insurance plan, she explained.
Some plans won't be required to implement this feature until 2015, she added.
The federal insurance law is also designed to offer premium assistance through tax credits based on income levels compared to the federal poverty level.
Johnson said that for farmers, determining what their adjusted gross income level is going to be in the coming year is difficult. "Who knows what ag prices will be, what corn prices will be, how your crops will do," she said. "Farming's challenges mean that it's difficult to calculate that."
The change in subsidy by either overestimating or underestimating their adjusted gross income (AGI) will be adjusted at tax time. A farmer who has gotten too much of a subsidy will have to pay it back, she explained.
The best advice from the experts Johnson had at the Dane County webinar site was to go by the number on the previous year's tax form for AGI. They advised farmers to talk to their tax preparers, who are also getting up to speed on the new program's implications on farm taxes.
"In order to get any kind of subsidies, the policies must be purchased on the exchange," she said.
Johnson cautioned farmers on the webinar that some insurance companies are calling policies by the name "Marketplace" but they aren't on the government's marketplace — thus people who buy them won't be eligible for the federal program's premium assistance subsidies.
The new health care law will affect Section 105 or Health Reimbursement Account (HRA) plans. Beginning in 2014, farms with more than one employee can no longer use pre-tax money to purchase individual plans, she explained. These HRA plans are still possible, if the wife is the only employee of the farm, she added.
"These are very personal decisions, based on which one is better financially for the farm family," she said.
Subsidies are based on the Marketplace's Silver plans. Going on the website will show people what kinds of plans are available through the Marketplace and local private insurers in that area.
Farms that have 50 or more employees, including a calculation for seasonal employees, must offer their workers "adequate and affordable" insurance plans.
The ACA considers a plan affordable if the annual premium for one person costs less than 9.5 percent of that person's annual household gross income. The plan is considered adequate if no more than 40 percent of the total health care costs in a year would be expected to be paid by the average person insured under this type of plan.
Many current employer-provided plans are 50/50 or even less, Johnson said.
Under the new federal guidelines this kind of "adequate" coverage would equate to at least a Bronze-level plan.
There is a calculation to help employers determine if they have 50 full-time equivalent workers. For every month they must count the number of employees that worked 130 hours or more and then add the hours of part-timers and divide by 120. These two numbers added together should be calculated for every month of the year and then divide by 12 to get an average.
Businesses, including farms that have 49.8 are not required to meet the insurance mandate — 50 is the magic number, Johnson said.
The mandate for employers with over 50 employees is delayed until January 2015, at which time there will be penalties for not providing health care coverage.
Johnson said that in preparing for the webinar she had lots of conversations with farmers across the state and she doesn't think there will be a large number of farms in Wisconsin that will fit into this category.
Farms that have less than 50 employees are not mandated to offer health insurance to their full-time employees but their workers will still be mandated to obtain insurance as individuals.
In the past there have been ways that smaller farm employers have been able to help their employees by providing some health care support through HRAs, flexible spending accounts and Health Savings Accounts (HAS.) Some of these tools are changing under the new law and farmers should seek advice on how they will affect their plans and the new subsidies for them and their employees.
Johnson said that the assumption will be that many farms will likely opt to allow workers to purchase their own insurance. She encouraged farm operators to talk to their workers about their options for insurance.
Once workers go through the Marketplace, they will be informed of their eligibility for subsidies and Medicaid.
She advised farm business operators to consult a professional advisor if the business is close to 50 employees.