Agri Leader

Healthcare costs a growing concern to Florida farmers

The ongoing implementation of the Affordable Care Act (ACA) - better known as Obamacare - is of increasing concern to Florida farmers as they grapple with its complexity and projected costs.

"The ACA is one of the priority issues for our membership now," said Janell Hendren, national affairs coordinator for Florida Farm Bureau Federation. "Our membership has indicated that reforms in the law and reduction of the penalties are a priority issue for them."

The biggest current concern for most farmers, Hendren said, is "the huge amount of confusion that has resulted from the delays of different parts of the law and the applicability to a particular farmer's workforce. There's just so much to it that it can be very, very confusing."

For example, Hendren said, there is no employer mandate that requires providing insurance for a workforce that includes 49 or fewer full-time employees. "However, there is huge confusion - especially for farmers - about what actually represents 49 full-time employees, because there is a whole calculation that has to be done just to determine that number under the law."

The calculation is intended to arrive at a number of "full-time equivalent" employees. And it is that number that determines whether a farmer must provide health insurance to his or her workers.

Sheldon Blumling, a labor law attorney at Irvine, Calif.-based firm Fisher & Phillips and a leading expert on the ACA and its impact on farmers, agreed with Hendren that confusion about the requirements of the law is a major issue among agricultural enterprises. And, he said, the relative complexity of determining how many full-time workers an employer has can be a daunting challenge.

The other issue of current concern is a final ruling from the IRS last month on the definition of a seasonal worker for purposes of calculating a farmer's number of full-time workers.

In its earlier guidelines, the IRS had said farmers could, in effect, average out a worker's hours over the course of a year to determine whether he or she qualified as a seasonal employee.

In its new ruling, however, the IRS defines a seasonal employee as one who works six months or less out of the year.

That distinction will have particular impact on Florida growers, Blumling explained, because the full production season for many Florida farmers is longer than six months - meaning that employers will be required to provide health insurance for more workers or pay the fine of $2,000 per year per worker for all except the first 30 employees, which are exempted under the law.

Another distinction that will affect many Florida farmers is that those who recruit employees under the H-2A guest worker program and have 50 or more full-time employees will be required to provide health insurance because the ACA requires coverage for all "lawfully present" workers, Hendren explained.

That will add an another cost to the existing additional costs, such as transportation and housing, that farmers already pay under H-2A to have a legal and reliable work force.

Steve Johnson, operator of Johnson Harvesting, a major contract harvesting enterprise in Hardee County that employs a total of about 1,200 workers, with about 650 of them working full-time, said he is still trying to figure out whether it's in his best interest to provide health insurance to his full-time employees or pay the penalty.

"The first year, I'll probably pay the penalty, because it will probably be cheaper," said Johnson, whose company harvests 5-6 million boxes of oranges each year.

If he elects to pay the penalty as the less expensive alternative, he said, that will still cost as much as $1.3 million per year. And that will wipe out his profitability and possibly even threaten the long-term survival of the well-established company, he said.

To recoup some of the costs, Johnson said, he will have to raise the rates he charges growers. And initial discussion of that possibility has already caused objections from clients, a number of whom say they will take their business elsewhere, he said.

"But I have no choice but to pass the cost on to my growers," Johnson said. "That's the only option I have, except for quitting the business."

And if he does decide to offer coverage, he added, he will have to hire two full-time health care administrators just to stay abreast of ACA requirements and proof of compliance.

Because of the fiscal impact ACA will have on major agricultural businesses such as Johnson Harvesting, Hendren advises farmers that they must speak up about their concerns to their Congressional representatives.

"And I'd put 'speak up' in all caps," Hendren said. "Farmers have a particular appeal to the American public, because people understand where their food comes from. So based on that, farmers should be speaking to their Congressional representatives and also to their neighbors about what this is going to cost them and what it's going to do to their businesses. And they need to present actual numbers. Because when you look at the numbers, it's just jaw-dropping what the impact of this law will be on farmers."