For the past four years, the Republican majority in the House of Representatives has tried time and time again to completely repeal or remove large parts of the Patient Protection and Affordable Care Act (ACA). Because of the significant disruption this law will likely have on club operations, personnel and finances, NCA has often been supportive of those measures. However, each repeal bill that has passed the House has been met with strong opposition in the U.S. Senate. Even if such a bill were to pass the Senate, it would be met with a veto from the White House.
As such, the House’s efforts at removing the law from the books have been more about expressing displeasure with the ACA than anything else. With the impending implementation of the law, such a strategy has not helped lessen the ACA’s impact on private clubs.
Unfortunately, House leadership has frowned upon the introduction of legislation to amend the law. The concern has been that by making amendments to the law, it could be seen as capitulating in the fight against the ACA. That was not something Speaker of the House John Boehner (R-Ohio) wanted to present to the country.
While this worked politically for some time, the reality of the situation made maintaining this approach difficult as 2014 began. Many small business owners (including private clubs leaders) are now facing the implementation of the ACA and have begun demanding that corrections be made to the problems associated with the law. Thus, a member of Congress who once received sustained applause by saying he “was trying to kill the law” now was getting pressured to fix the law—and fix it immediately. Therefore, a new approach had to be taken.
Surprisingly, this new approach has come from House leadership. Indeed, Speaker Boehner has now actively sought out bills that amend—not repeal—portions of the ACA. For our industry, this new focus has allowed meaningful bills to get some important notice. It is this change of tack that could make a significant difference for private clubs as they work through the ACA’s issues. Below are the bills that are gaining momentum.
The SAW Act
One ACA provision that has received a lot of attention is the new definition of full-time employee. Under the law, an employee working 30 or more hours per week is now classified as full-time. With this classification, clubs may have to offer insurance to an employee who was not eligible for insurance in the past. Naturally, clubs in this situation will have a much larger yearly insurance cost. In response, many clubs are considering reducing those employees’ hours to below the new threshold.
Not only could this new definition cause employees to lose hours, but it could also place a significant burden on clubs. Though most clubs are financially better off now than they were a few years ago, the fact remains that this definition will impact their bottom lines. With insurance costs rising and the potential to have more full-time employees on a club’s insurance rolls, club leaders are looking at every option to minimize those costs.
At the start of this year, NCA and our coalition allies began working with Rep. Todd Young (R-Ind.) on legislation that would change the definition of full-time employee from 30 hours to 40 hours per week. His bill, the Save American Workers Act (SAW Act), caught the attention of the House leadership.
Because this measure fixes a problem suffered by many businesses, Young was given the green light to bring his bill forward for a vote. With this new focus on results rather than repeal, Young’s bill passed with a bipartisan majority of 248-179 in mid-May.
The STARS Act
In February, the Internal Revenue Service (IRS) issued the ACA’s final Employer Mandate regulations. Those rules included two distinct processes to follow when dealing with seasonal hires. The first relates to how a club counts its seasonal workers to determine if it falls under the law. Under that rule, the IRS provided a four-month exception period. The second process relates to whether a club must offer insurance to a seasonal employee if it does fall under the law. Under that rule, the IRS provided a six-month exception period.
Unfortunately, the IRS regulations make these two processes extremely confusing for many club leaders to follow. In response, NCA and other allied associations began discussions with Sen. Mark Warner (D-Va.) and Sen. Mary Landrieu (D-La.) about removing some of this confusion. In addition to our talks with those senators, we also began working with two House members, Rep. James Renacci (R-Ohio) and Rep. Kurt Schrader (D-Ore.) to sponsor a bill and bring it forward for a vote.
Those discussions have turned into the Simplifying Technical Aspects Regarding Seasonality Act (STARS Act). This bill synchronizes the exception periods at six months for both situations and reaffirms that seasonal employees cannot be considered full-time employees (and thus will not need to be offered health insurance) if they stay on property for no more than six months.
As of late May, the final touches were being made to the STARS Act and it will be introduced in the House shortly. Under the House leadership’s new focus, it is expected to pass easily with strong bipartisan support.
The Small Business Job Protection Act
Under the ACA, a private club must comply with all aspects of the law if it employed 50 full-time or full-time equivalent employees during the preceding year. Since the law’s passage, NCA and our allies have been looking into ways to increase the 50 full-time employee threshold. With higher expected premium costs and with many new individual employees covered, smaller clubs (those with between 50-99 full-time employees) may have to reduce coverage, remove spousal benefits, remove employer contributions for spousal and/or dependent coverage, lower employee hours or drop insurance altogether to contain costs.
This could all be avoided for smaller entities if the threshold for compliance with the ACA was higher. Rep. Luke Messer (R-Ind.) believes so as well. His bill, the Small Business Job Protection Act, would increase the threshold number from 50 to 100. House leadership has taken an interest in the bill and it may well be the next one that comes forward.
HIT Delay
Of all of the new taxes included in the ACA, the new health insurance tax (HIT) may be the most unfortunate. The HIT is a new fee levied against insurance companies for every health insurance policy sold. Naturally, insurance companies will simply pass this cost on to their customers. The increase in costs to clubs is expected to be between $350 and $500 per insured per year.
Rep. Charles Boustany (R-La.) and Rep. Ami Bera (D-Calif.) introduced a bill that will delay the start of the HIT for two years. NCA is working with both congressmen to increase interest in this measure. House leadership continues to speak favorably of the bill and, with a strong contingent of Democratic House members serving as co-sponsors, it will likely receive a vote soon.
Conclusion
With the ACA about to be fully enforceable, many clubs must start dealing with the realities of the law today. As such, passing smart, pro-growth, pro-business amendments is the only way to relieve some of the pressure clubs are feeling from the law. The good news is House leadership has made the decision to do just that.
With this philosophical change in the House, the leaders of the lower chamber of Congress have now put a priority on making real modifications to the law that will help the private club industry. Unfortunately, the same cannot be said for the Senate. In the upper chamber, Senate Majority Leader Harry Reid (D-Nev.) still desires to keep the law intact, regardless of the bipartisan support some bills receive in the House.
For years it seemed unlikely the House would ever change its stance on the ACA, but it did. By doing the same, Majority Leader Reid could be part of a solution that makes the ACA far more palatable for many clubs. With full implementation of the law beginning in less than seven months, let’s hope Senate leadership makes that same decision sooner rather than later.