Courtesy of University of Nebraska-Lincoln Extension

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March 31, 2014
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Extension Tips: Healthcare decision making for farmer and rancher businesses

Prior to enacting the Affordable Care Act, studies identified farm and ranch families as a segment of the population seriously burdened by healthcare costs.

A 2007 survey conducted by the U.S. Department of Agriculture, and sponsored by The Access Project, showed that Nebraska farm and ranch operators were more likely to purchase insurance in the non-group market where premiums tend to be higher and coverage less comprehensive.

The survey also found that Nebraska family farmers and ranchers were more likely to draw down resources, such as savings or retirement funds, to cover healthcare costs.

As of Jan. 1, 2014 every individual in the United States will be required to have health insurance coverage under the ACA’s individual responsibility provision. Like other self-employed and employer businesses, farmers and ranchers can shop for health insurance coverage through federally-funded insurance exchanges or through private insurers.

NOTE: Under the ACA, there are no distinctions between agricultural enterprises and non-agricultural enterprises for implementation of the law.

You are encouraged to become familiar with the different self-employed or employer classifications within this website to help determine the best coverage option for your current business operation. Consult with an attorney, accountant, human resource consultant, insurance agent or other advisors when making decisions regarding employer-sponsored health coverage.

Decision Options

Although all businesses fall under the same ACA regulations, farm and ranch businesses with employees may have unique circumstances that highlight the importance of understanding how the regulations apply. To fully understand the regulations that apply to your business, click the right-side button that fits your business.

Other sources of information include:

• “Overview of Health Care Reform and its Impact on Agricultural Employers” (Source: American Farm Bureau Federation)

• “Farmers Face Important Decision Related to U.S. Health Reform” (Source: K-State Research & Extension)

Key Agricultural Issues

As farm and ranching operations have become larger, so has the need for hiring additional people to work these operations.

Like other small businesses trying to attract and retain good workers, farm and ranch operations may offer healthcare insurance as a benefit for full-time hired hands or employees. Rather than being part of a small group plan, these may be individual policies that the farmer or rancher purchases and pays for one or two employees.

When determining insurance coverage needs, below are some additional ag-related issues that you should consider:

Variability of Income

Agricultural producers that need individual or family health coverage should read the information listed under the self-employed category.

If you choose to purchase coverage through the federal marketplace exchange and are eligible for a premium tax credit, you should fully understand how the tax credits are calculated and possible tax implications resulting from income fluctuations.

Premium tax credits will be based on your modified adjusted gross income and are available on a sliding scale with higher incomes receiving less tax credits. Individuals and families with incomes between 100 percent and 400 percent of the federal poverty level who purchase coverage through Marketplace and who are not eligible for other affordable coverage, may receive a premium tax credit and out-of-pocket subsidy.

Income fluctuations and changes in family size will affect your estimated tax premium credit amounts.

You may choose to receive some or all of the estimated credit paid in advance directly to your insurance company to lower your out-of-pocket monthly premium costs in 2014; or the tax credit paid when you file your 2014 tax return in 2015.

However, if your income greatly increases from when you first purchased your Marketplace coverage and it exceeds the amount of tax credit you are eligible to receive, you will be obligated to return the extra tax credit when you file your tax return, either as a reduced refund or balance due payment.

Other sources of information:

• Questions and Answers on the Premium Tax Credit (Source: IRS)

• The Premium Tax Credit (Source: IRS)

Insurance and Young Adults

Farming is ranked as the fourth most dangerous occupation in the U.S.

Young adults are often hired for full-time work on farm and ranch operations. Unfamiliar with equipment and terrain, these employees can work long hours and generally aren’t provided with any formal safety training. Injury-related visits to emergency rooms are far more common among young adults than among either children or older adults.

Not all young adults have health insurance through a parent’s plan. A study done by the Common Wealth Fund determined that two out of five young adults reported a gap in insurance.

At the time of the study, 22 percent of the respondents were uninsured.

Affordability tended to be a greater barrier for them than a perception of being invincible and not needing healthcare.

Along with the levels of coverage (bronze, silver, gold or platinum) the federal or private exchanges will offer catastrophic plans for young adults under age 30 before the plan year begins.

While these may seem like a low cost alternative these plans, the plans will not be available in the small group market. Bronze plans may be a better choice and less expensive in the long run for the employer and employee.

Employee Classifications

Starting in 2014, the Affordable Care Act will herald in numerous regulations that affect all businesses.

These regulations will vary depending on employer size. Businesses classified as a “Large Employer” are determined to have more than 50 full-time equivalent employees, whereas “Small Employer” businesses have less than 50 full-time equivalent employees.

Under the ACA, employees that work an average of 30 hours per week (130 total monthly hours) are considered full-time. Go to for full-time and part-time calculations.

Important Ag Employee Classifications

Seasonal Employees

The ACA provides limited relief to agricultural employers who temporarily increase the number of their employees to accommodate for seasonal work.

As a small employer with less than 50 full-time equivalent employees you are not required to provide health insurance nor pay a shared responsibility penalty.

Should seasonal employment increase your employee count to more than 50 full-time equivalent employees, you still may not be required to provide insurance. This exception only applies if your seasonal employees are in service for 120 days or less and the increase is seasonal in nature.

Should your seasonal employees work more than 120 days, they would then be counted as full-time during the months worked and could force a company that is near the 50 FTE level to provide insurance or pay the shared responsibility penalty.

Keeping track of your employees work hours will be essential to avoiding the bump up to 50 FTE.

Note: Seasonal employee classification is subject to change.

For example, Brown Farms employs 30 full-time employees for 12 months of the year and during harvest and processing (September to November) they employ an additional 75 full-time seasonal employees.

Brown Farms employs an average of employees per month calculated as follows:

35 FT employees X 12 months = 420

75 FT employees X 3 months (Sept - November) = 225

420 + 225 = 645 / 12 = 53 employees average per month

Although Brown Farms averages 53 employees per month, they actually only exceeded 50 employees for the 3 months that the Farms employed seasonal workers.

Since the seasonal workers were employed for less than 120 days, Brown Farms is not classified as a “large employer.”

Also see “How the Affordable Care Act Impact Agricultural Employers,” at

Seasonal employment will also affect your employee count and your eligibility for small business health tax credit (see Less than 25 FTE). For example, Smith Farms employs five full-time employees for 12 months of the year, and from spring planting through harvest (April - November) they employ an additional 10 full-time employees. These individuals would be included in the FT employee count since they worked more than 120 days in the calendar year.

The additional employees could reduce your health tax credit, however the impact may be insignificant to your company overall.

Agricultural H2-A workers

H2-A temporary agricultural program allows agricultural employers to bring nonimmigrant foreign workers to the U.S. to perform seasonal or temporary agricultural services.

Individuals employed on your farm or ranch that have a H2-A foreign agricultural worker permit are to be treated like other employees or seasonal workers. If you employ non-documented workers, their hours are not included in your full-time count.

However, you may be breaking other state and federal employment laws.

Farm Labor Contractors

Typically, farm contractors are required to provide coverage for their employees, if they exceed the 50 FTE threshold.

You as an agricultural employer would not be responsible nor would you include the contractor labor in your employee count.

If your contractor is required to provide health coverage, these costs may be passed onto your business through increased prices.

Combining companies under common ownership

For employers that have multiple entities (such as an owner having several businesses) the IRS aggregation rules governing control groups apply to the ACA employer determination.

This ruling states that all employees of businesses which are under common control are treated as employed by a single employer.

The aggregation rules are complicated; work with your attorney if you feel this may be an issue with your companies and if the number of employees may be greater than 50 FTE. ❖

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The Fence Post Updated Mar 27, 2014 01:50PM Published Apr 2, 2014 11:18AM Copyright 2014 The Fence Post. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.