Farmers' insurance costs may grow

Area farmers with private health insurance may have to pay more for coverage under the new Affordable Care Act known as Obamacare.

The ACA law mandates insurance plans provide minimum essential coverage farmers may not have in their private health plans, said Dan Rapp, senior director of health programs development for the Ohio Farm Bureau.

Farmers who only work on the farm typically purchase health insurance through a spouse's employer, Rapp said. Those who do not have that option buy a private policy, he said.

"Our farmers are used to facing a certain amount of risk and can manage it, so if they could have a health insurance plan with a $10,000 deductible, they may be comfortable with that and it is an affordable monthly payment," Rapp said. "With the new ACA, that will not be possible anymore, so that will result in a higher monthly premium."

Policies with high deductibles decrease the cost of a health insurance plan, Rapp said.

Plans in place before March 24, 2010, are grandfathered and do not need to be ACA compliant, he said. Farmers with policies not grandfathered and not ACA compliant likely will have to purchase new, more costly plans.

"A benefit of having a grandfathered plan is you already had a plan that is structured the way you like," he said. "It could be less expensive to maintain a grandfathered plan than to move to an ACA plan."

Larry Gearhardt, a tax expert with OSU Extension, said the new ACA regulations will have little effect on farmers in Mercer and Auglaize counties. Larger operations and those with seasonal employees will be the most affected because they must provide health insurance coverage for their employees or face fines, he said. Larger employers are those with 50 or more full-time and/or full-time equivalent employees.

"You've got people in your area who are very conservative and the vast majority already have insurance, so I don't see a lot of activity in your area," Gearhardt said. "They won't get into a lot of issues unless they try to get a new policy."

Gearhardt said one of the biggest questions farmers have is whether to stay with their existing private health coverage or try to get a better deal through the government exchange. Gearhardt said the exchange plans include health benefits that all plans must now cover, including maternity and newborn care, mental health services, prescription drugs, rehabilitative services and others. This, theoretically, could make exchange plans cost more.

"But the theory is insurance on exchanges is going to be less expensive because the cost is spread out over a large number of younger, healthier people," he said.

Two area farmers who currently purchase private health insurance said they plan to look into obtaining less expensive health insurance through government exchanges.

"We've been trying to shell corn and cut beans, but yes, we are going to look into the exchanges," Celina area grain farmer Dennis Howick said.

Howick said he and his wife had to purchase private health insurance about 10 years ago when his wife lost hers with a previous employer.

"It's pretty darn expensive and not that great," Howick said of their existing policy. "If we can step up in that coverage, you got to take advantage of it."

Auglaize County dairy farmer Lou Brown said he also may look to the exchange for less expensive health insurance for his family.

"We haven't gotten an update that anything is going to change," Brown said. "We just had a dairy meeting this past month and they told us to call DFA (Dairy Farmers of America) headquarters and they would send us information on what they know so far."

Gearhardt said he feels new taxes enacted to help pay for Obamacare will have a bigger effect on local farmers.

Starting this year, a 3.8 percent Medicare contribution tax is imposed on net investment income on individuals, estates and trusts. Investment income includes interest, dividends, capital gains, taxable annuities, royalties and farmland rent income non-farmers receive.   Another Medicare tax also will be imposed on the wages of self-employed individuals who make in excess of $250,000 for those filing taxes jointly, $125,000 for married taxpayers filing a separate return and $200,000 in all other cases.

"With how good things have been, that could affect a lot of farmers there," Gearhardt said of the extra tax on wages of self-employed individuals.

The additional capital gains tax farmers will have to pay when they sell land could be a deterrent to passing farmland on to the next generation.

"If a farmer is selling land, he will be in one of the highest income brackets and one of the highest capital gains brackets," he said. "With the price of farmland over there, $10,000 to $11,000 an acre, if you're selling a couple of acres, you're in a pretty high tax bracket."

Howick said the only information he has heard about the new taxes linked to Obamacare is the 3.8 percent that would apply to capital gains.

"The only thing I know right now is if you sell anything, over 3 percent goes into Obamacare," Howick said. "It's all a big tax is what it is."

Rapp said the new law has prompted people to take a closer look at their insurance coverage.

"If there's one thing this has done, it's forced people to take more responsibility for their own health care plan and do more research on their own," he said.