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Health care reform law to spell higher costs for growers in 2014

by Joan Murphy | March 24, 2010
WASHINGTON -- Produce companies, particularly growers, will have to brace for major cost increases in 2014 as a result of the just-passed health care reform measure unless Congress tackles the seasonal worker issue.

The new law (H.R. 3590), which passed the House of Representatives March 21 by a 219-214 vote, was signed into law March 23 by President Obama. With the ink barely dry on the 2,400-page law, Democrats working on another piece of legislation (H.R. 4872) composed of tax and revenue "fixes" that were being debated on the Senate floor at press time.

Under the new law, starting this year health plans would be banned from discriminating against children based on pre-existing conditions or from dropping people when they get sick. Small businesses may qualify for the first phase of tax credits for their contributions to purchase health insurance for employees.

But the thorniest provisions for employers go into effect in 2014 when most Americans will be required to have health insurance or else pay penalties. The details of those provisions, specifically the tax and penalty components, may be changed by the Senate, leaving even the most seasoned Washington lobbyists skittish about estimating the financial burden the new health care bill will have on agricultural-based businesses.

Growers have been warning Congress about the health care reform's impact on employers who are faced with the dilemma of being required to provide health insurance to short-time, seasonal workers on their payroll or face steep penalties.

"We've been screaming about this for a year," said Cathleen Enright, vice president of government affairs for Western Growers Association. But Congress has not focused on the plight of agricultural employers, she said.

Today, growers may provide health care for workers on good years but may skip it when the cash flow is bad, Ms. Enright said. Even if cash flow isn't a problem, employers will need to deal with the complexity of applying the new system to production agriculture, where seasonal workers may have five or six employers across state lines.

Tax credits that can help small businesses may not be available to agricultural employers who hire seasonal workers for longer periods of time. That may work for growers who use short-term help to harvest cherries, but leafy greens growers who keep a seasonal workforce on the books for up to six months may be out of luck, she said.

Even when employees are offered insurance benefits from Western Growers, some decide to "hold onto their money" and not purchase plans, which will leave employers on the hook, Ms. Enright said.

"We're very concerned about the bill's impact on growers-shippers and their hiring of seasonal workers," Mike Stuart, president of the Florida Fruit & Vegetable Association, told The Produce News March 24. "Nobody knows how seasonal workers will be handled, but we do know there will be significant penalties for employers if they don't cover every employee."

According to Mr. Stuart, one problem is that the bill will assess an employer with more than 50 employees a penalty if the employer does not offer health benefits or if any of the workers obtain subsidized coverage through the new health insurance exchanges.

Under the new law, the penalty would be set at $3,000 for each employee who receives subsidized health care coverage, or $750 for each full-time worker in the company, whichever is less. That provision may change, however, as the Senate debates the package of Democrat-backed revisions. "It's going to load up employers with a significant additional cost beginning in 2014," said Mr. Stuart, who was scheduled to fly to Washington March 24 to meet with Florida lawmakers.

Under the law approved March 23, employers with fewer than 50 employees are exempt from penalties.

But Ms. Enright said that seasonal workers may force small businesses over the 50-employee threshold. About 80 percent of Western Growers' members employ 18 or fewer full-time workers, but that doesn't count seasonal workers, she noted.

"If you have a packinghouse running multiple lines and multiple shifts, they will hit the 50 [employee] mark pretty easily," explained Ray Gilmer, vice president of communications for the United Fresh Produce Association. A processor running 365 days a year will easily hit the threshold, too, he said.