Obamacare and Employees

For the past two weeks, I have written about the Affordable Care Act (ACA), or Obamacare, and how it affects large and small businesses. (Click here to view last week’s post.) I have also heard from several employees who are concerned about how this legislation will impact their lives. In truth, the law already has been in effect for over 3 years, but January 1, 2014 marks a new milestone in the way businesses and their employees are impacted. American workers are wondering if the cost of their health care premiums and coverage will go up as a result of this game-changing legislation.

Doctor_PatientWill your paycheck be affected?

Funding for all of the new expenses resulting from the ACA has to come from somewhere. Instead of increasing the deficit to fund the program, President Obama has introduced 21 new taxes; it’s estimated those taxes will negatively impact the incomes of only 2% of Americans, whereas 98% won’t see any change in their take-home pay. Click here for a full list of Affordable Care Act tax provisions.

However, on average, employers are expected to see a 6.5% rise in their rates from insurance companies, and that could create additional premiums for their employees. Obamacare forces insurance providers to offer coverage to all Americans, even those with pre-existing conditions, and those insurance companies may pass that increased expense onto employers. According to Mercer’s 2012 National Survey of Employer-Sponsored Health Plans, 58% of employers plan to pass a portion of their increases to their employees. It is at your employer’s discretion whether they will pass along that burden in some form or fashion; however, the Obama administration anticipates that benefits from the ACA will offset any reduction of income employees might see.

Will your coverage change?

The American Action Forum estimates that, under Obamacare, 35 million Americans will lose employer-sponsored health care coverage. Those employees will be forced into government-run exchanges, which the government is working to make affordable. The good news from just last week is that the exchanges may be even more affordable than previously thought. The Washington Post noted that the heavy competition among providers in California and Oregon is driving down costs to lower than what the Congressional Budget Office had anticipated. What plan you choose dictates what coverage you will have, which may or may not be different than what you were receiving previously.

Some Americans and their families will receive a tax break when purchasing their insurance plans through the exchange. The price for plans is capped at no less at 1.5% and no more than 12% of their income for health insurance premiums under the new law. The amount you will pay is determined using a sliding scale.

Health careIf your employer does not offer health insurance and you choose not to get an individual plan, you will be subject to a penalty of $95 or 1% of your income (whichever is greater) for noncompliance in 2014. Readers, you should expect this to rise in 2016 to $625 or 2.5% of income.

How should you prepare?

With all of the new laws, taxes, and regulations, it is important to plan ahead and prepare for the changes that are certain to take place. Your situation is likely to change in one way or another. You should start budgeting for an increase now, and be pleasantly surprised if it doesn’t come. If you have concerns over what will happen to your health care plan at your workplace, now is the time to have a conversation with your benefits administrator or human resources manager.

Readers, what are your employers doing to prepare for Obamacare in 2014? Have you developed a strategy of your own?

Best wishes,

Anita

Have a question you would like to ask? Visit http://anitaclew.com/ask-anita/.

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Seeking Solutions for Obamacare

A reader writes…

Hi, Anita:

As the HR Director of a company with 56 people, Obamacare is on the top of my mind. My company is on the fence about what we should do. We don’t want to let go 7 people to be under the magic number of 50, but we want to avoid the steep penalties. What are your thoughts on how to best handle this new law as an employer or business owner?

Dear, Seeking a Solution:

Thank you for the question! Business owners and employers are all struggling with the looming question of how they will handle the coming implementation of Obamacare’s penalty provisions. I am glad to hear that my readers are already thinking about the subject and beginning to get their strategies in order now. In your situation Doctor_Handswith just over 50 employees, you are in the category that must provide affordable health insurance or face hefty fines.

After doing some research and evaluating the options, I have determined that the best course of action for businesses like yours is to move your excess employees over to a staffing firm’s payroll. Here is how I came to this conclusion.

  • By migrating 7 workers to a staffing firm’s payroll, you can cut your “full-time equivalent” staff below the 50-person limit, which means your company will not be subject to fees and penalties. The staffing company becomes the official employer of record and is responsible for providing health care or absorbing the penalty. In our reader’s case, if they were to move Medical_Filesthe 7 people from their payroll to a staffing company, it could save them $14,000 in penalties and potentially even more in insurance costs.
  • Some staffing firms offer health benefits to their temporary employees, relieving you of any moral concern or burden. My favorites are Select Staffing, RemX Specialty Staffing, Remedy Intelligent Staffing, and Westaff.
  • Lower insurance rates for your employees.  Larger staffing firms have so many employees on their insurance plans that they are able to negotiate great group rates. This cost savings can be passed on to you.
  • By moving your a portion of your workforce to a staffing firm, you will not be required to comply with the complex reporting requirements. The employer must report regularly to the IRS, its employees, and to all states in which the company does business. This will reduce costs and provide a savings in administrative overhead.

On a recent episode of his CNBC show Mad Money, financial analyst Jim Cramer noted that the demand for temps is mushrooming, “fueled in part by the pending implementation of Obamacare.” He says: “Businesses of all sizes are searching for ways to cope with this law, and the easiest way to avoid paying these expenses is to hire more temps.”

Employers, what are your plans for managing the Obamacare mandate? Will you be turning to staffing firms for help?

Best wishes,

Anita

Have a question you would like to ask? Visit http://anitaclew.com/ask-anita/.

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Obamacare Effects: Employers

A reader writes…

Hi, Anita:

I am a small business owner with about 45 employees and have some questions about Obamacare. I have heard a lot of buzz about the subject but not much concrete information about the effects of its implementation. Can you help shed some light on how my business and I need to adapt to these changes in the law?

Dear, Unsure About Obamacare:Dr_Woman

The Patient Protection and Affordable Care Act, also known as Obamacare, has been on the minds of business owners and  managers across the country. Though the next round of changes isn’t scheduled to begin until January 1, 2014 (can you believe we are halfway through May already!), now is the time to get the facts straight and figure out what steps you need to take to prepare. Below are some basic points all employers and managers need to keep in mind:

  • The Affordable Care Act applies only to employers that have 50 or more employees or full-time equivalents. Because you have 45 employees, you will not be required to “pay” (a $2,000 penalty for each employee after the first 30 not covered by insurance) or “play” (and provide coverage for each of your full-time-equivalent employees) come 2014. However, if your business grows and you need to add 5 or more full-time employees, you will be subject to these rules. Note that “50 full-time-equivalent employees” means that the total hours among all full- and part-time employees equals the amount of hours worked by 50 full-time employees.
  • State exchanges will provide individuals and small employers (those with less than 200 employees) a marketplace to purchase group health coverage plans.
  • Comprehensive health plans used by employers to leverage employment deals and keep the best talent on staff are subject to an additional tax. In 2016, health benefits that are valued at $10,200 for single coverage or $27,500 for family coverage will be taxed at 40%.
  • If the health care plan you offer your employees is too expensive and exceeds 9.5% of their income, you will be subject to a hefty fine. This piece is a growing concern for employers like manufacturing firms, restaurants, and retail establishments that offer positions at a lower wage. Employers will be facing a penalty of $3,000 if the plan is deemed unaffordable or inadequate.

If your head is swimming, you’re not alone. It’s a complex law but an important one for everyone to understand, especially you as a business owner. Because I’ve also received questions about Obamacare from employees and job seekers, I’m going to be writing a series of posts on this subject over the next couple of weeks. So check back next Tuesday!

In the meantime, you might want to watch the video below, in which CNN medical correspondent Elizabeth Cohen explains which parts of health care have changed or will change soon as a result of Obama’s health care reform.

Stay well,

Anita

Have a question you would like to ask? Visit http://anitaclew.com/ask-anita/.

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Power of Productive Teams

Hi, Anita:

Thank you for sharing your words of wisdom with my team and me. We look forward to your post every week and have a question for you. What elements or structure do you need to have a highly productive and effective group of employees? We are looking to boost and build our team to the next level!

Dear, Eager Leader:

It warms my heart when I get questions from my faithful readers. There isn’t much that will put a bigger smile on my face than you all do. Okay, I’ll lay off the mushy stuff. As for your question, I have seen plenty of professional teams, both good and bad. Through my observations and research, I have whittled down the big picture to find the special ingredients for a flexible, efficient, and effective team. I hope you’ll find them beneficial.Productive_Teams_1

  • Clear goals. As a manager, you must set clear goals and expectations for your team. This will make sure that each person both understands what is expected of them and has the direction to work toward a common goal.
  • Hire competent people. If you team does not have intelligent people that possess skills to contribute to the group, you might as well hang up your hat. Good people are the driving force to being effective and productive. Remember that you are only as good as your weakest link. If you do have a weak link, do yourself, your team, and the “link” a favor and let him go. Though it may be painful at first for all parties, everyone will be better off in the end, including the terminated employee.
  • Unified commitment. Each person on your team must be dedicated to achieving the end goal and willing to put in the effort  to get there.
  • Lead by example and set standards. Set the tone for your group by your example. Only deliver high-quality work and only accept it in return.
  • Create a collaborative environment. Encourage all members of your team to give their input and contribute ideas to the group. Being open and accepting will only make your unit stronger.
  • Recognize and support. When a member of your team or the group in their entirety accomplishes a task or works through a tough problem, by all means, celebrate. Recognition is a great way to motivate your employees and keep the momentum moving.

I hope you will implement (if you haven’t already) these key elements that I believe are the foundation for amazing teams. With a strong structure, clear understanding, and mutual respect, the possibilities are endless.

Manager/Supervisors: What element of your team do you think contributes most to your success?

Disclaimer

Anita Clew's blog posts are intended for general guidance and should never be taken as legal advice. In all instances where harassment, inequity, or unfair treatment is believed to be present, please consult your HR Department or legal representation.
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