Affordable care could cause pain for US refractories businesses

By Laura Syrett
Published: Tuesday, 27 August 2013

Healthcare reform will bring affordable medical provision to millions of Americans, but the administrative requirements for complying with new regulations is causing anxiety amongst manufacturers, Laura Syrett discovers.

US refractories manufacturers are preparing to grapple with details of new social legislation designed to make healthcare in the US more affordable.

President Barack Obama’s Administration’s Patient Protection and Affordable Care Act, commonly referred to as Obamacare or the ACA, was signed into US federal law in March 2010, and arguably represents the most significant regulatory overhaul in the American healthcare system since the passage of Medicare, back in 1965.

The bill aims to increase coverage and affordability of healthcare, partly through the introduction of a mandate for employers of over 50 staff to offer “affordable” health insurance to their full-time workers, or face a financial penalty of $2,000 for each qualifying employee.

Although the employer mandate was originally due to come into force in 2014, the government has given all businesses an extra year, until January of 2015, before they’ll have to provide health insurance for their workers.

This gives the government more time to fine-tune the legislation, and offers employers a chance to familiarise themselves with new requirements, although some have criticised the delay as being yet another year of uncertainty.

Impact on refractories businesses

The US refractories industry is no stranger to strict regulations governing everything from workplace safety rules to emissions standards. But the sector, like many other business groups, has raised concerns about the complicated provisions of the new legislation, and the costs of meeting its requirements.

According to Rob Crolius, president of the Pittsburgh-based Refractories Institute (TRI), complying with the new legislation could be a headache for refractory manufacturers.

“It has been fairly routine for the past 50 years in the US for employers to provide their employers with health care insurance, with employees paying some of the cost of their care,” Crolius explained to IM.

“The Obama plan mandates that employers provide coverage, or, in the alternative, pay a stiff penalty into a fund to help pay health care coverage for workers not covered by an employer plan,” he said.

“The details of the legislation are still being worked through in the US, but all employers are having a tough time sorting out all the new requirements,” he added.

ACA complications

As part of the ACA mandate, employers will face a host of new reporting requirements. For example, employers that issue more than 250 W-2 forms (wage and tax statements for staff) annually must report the total cost of health coverage stated on forms issued after 1 January, 2013.

Beginning in tax year 2014, employers will be also be required to report information to the Internal Revenue Service (IRS) about the coverage offered to full-time employees, and self-insured employers will have to provide information to the IRS about employee enrollment in health insurance coverage.

In addition to the new reporting to the IRS, the ACA also amended the Fair Labor Standards Act to require employers to inform employees about the availability of health insurance exchanges (non-employer sponsored schemes offered by individual states).

Aside from reporting requirements, some aspects of the ACA still lack clarity, and uncertainty over these points is worrying employers.

One of the grey areas within the new legislation recently highlighted by the New York Times is the stipulation that the insurance must be “affordable”.

The law defines affordable as meaning that the employee’s share of the premium cannot exceed 9.5% of their household income; however, this assumes that an employer knows what the household income of each employee is, when in reality this figure is likely to vary greatly between individuals.

Understanding how the penalty for not providing insurance applies is also causing employers to scratch their heads.

Many companies, particularly small businesses, will employ staff over varying shift patterns. It is unclear how the obligation to provide insurance for “full-time” staff, defined as workers employed by a firm for 30 hours per week or more, will affect employers that operate on such working practices.

However, this is less of a concern for manufacturers, which tend to employ staff on regular shift patterns.

Wider economic concerns have also surfaced. The National Federation of Independent Business has expressed fears that the ACA will discourage small businesses from hiring in order to keep their workforces beneath the mandate threshold.

Furthermore, there have been warnings that employers may cut the hours of staff, thereby avoiding the mandate which only covers full-time staff.

The role of The Refractories Institute

In light of these looming regulatory challenges, the US refractories industry is taking a proactive response to the ACA, hoping to anticipate and iron out kinks in the rules before they cause any difficulties for manufacturers.

Following its mandate to assist member companies in understanding and complying with new regulations, TRI has hosted panels on the healthcare legislation at its last two annual membership meetings.

Additionally, TRI functions as a conduit for information transfer within the industry and provides training opportunities for members to adapt to new rules.

Crolius explains why a body like TRI is needed: “As the refractories industry is relatively small, we usually work though umbrella groups in dealing with legislators who are writing laws and the regulatory agencies who are writing regulations to enforce those laws.”

TRI is a member of the National Association of Manufacturers and works with the group on general industry issues, helping it to take a broad-based approach to new legislation and contribute to wider discussions on potential regulatory impacts.