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

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16 Comments (+add yours?)

  1. radon
    Jun 24, 2013 @ 18:25:08

    Well I also have been one of those staffing employees but, didn’t remain due to my personal work ethics. As much as I don’t agree with Anita’s answer, I would have to agree with it. Affordable healthcare is not an issue for gov’t to resolve, this should be a gimmie of the healthcare providers. Part of the code of ethics one might say.

    Reply

  2. Mary Watkins
    May 23, 2013 @ 03:12:55

    I am not surprised at Anita’s answer, considering her long relationship with The Select Family of Staffing Companies. I believe many of Anita’s readers are here simply because of our own relationship with The Select Family of Staffing Companies.

    It is one possible solution. There may be others.

    Reply

  3. la.liona786@gmail.com
    May 22, 2013 @ 16:26:10

    sign xl

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    Reply

  4. Robin
    May 22, 2013 @ 15:01:18

    Sorry Anita, this one I don’t agree with…
    I worked for a temp staffing agency…not a happy moment in my life. No benefits, no security, no loyalty, no consideration from the client company; in fact almost alienation by the client workforce, lesser privileges than the “full time” employees for the same work being performed, no positive motivators to perform well. The pay was minimal for the temps and the Full time employees received $5 an hour more in the same job class.
    If this small company joined with several other small companies and form a group they could negotiate cost like larger companies. It may not be as large a discount but it is something.
    Employees are the easiest reduction of cost, lose them and you save short term dollars. Who cares that you may lose good employees only to retain the slacker, overwork the remaining staff, stress them to a breaking point, or lose the respect of remaining staff, but you did save a bundle on health insurance!

    Reply

  5. Lisa McCrum
    May 22, 2013 @ 12:31:26

    Sure, employee us worker bees through an impersonal agency who makes 50% of what we work hard for instead of us making a living wage. On top of that we work with no insurance as our wages are too low for us to afford to buy insurance. No stability – no loyalty. Anita, your suggestion is crap.

    Reply

    • Daniel
      May 22, 2013 @ 22:21:51

      I AGREE. ANITA’S ANSWER SUCKS!

      Reply

    • Joe
      May 23, 2013 @ 07:14:44

      Everyone this day in history feels entitled. Entitled to things they dont want to pay for and cant afford. Unfortunatly for the self entitled the staffing firms markup is way more cost effective then the not free Obama Care. Obama care is so extreme it will be coming out of everybodys pockets one way or another and unfortunatly for this country the business owners of America are going to be paying the price. They will have to take drastic steps to stay in business like cutting employees or taking a huge hit with affordable insurance or fines. The employees dont realize it will cost them lots out of their own pocket as well and when they dont want to pay for it they will get a nice fine at the end of the year also. Socialism suckssss, I dont need the government taking care of me.

      Reply

      • Jack Tracey
        May 23, 2013 @ 12:11:57

        Well, Joe, like most libertarian types I think you will be proven radically wrong on the views you express. One of the flaws of this bill was its long roll-out period and people like you were criticizing it right out of the gate, long before the true benefits and impact will be known, or even the actual cost of premiums.

        The idea that everyone except the greedy top earners is somehow “self-entitled” or in a Romney-ism “moochers” is one that you would be wise to rethink. Access to affordable health care is NOT something that should be available only to those with means, or those poor enough to qualify for Medicaid.

        Give Peace a Chance, Joe. At least let the ACA roll out and see where the premiums are before you decide that being ripped off by staffing firms is a good solution to the question of how to deal with it as a small business.

        And, just to be clear, staffing firms have their place and I am not against staffing firms. But for an employer to switch long-term employees to temp status just to avoid paying benefits that they OUGHT TO BE PAYING ANYWAY is just ludicrous!

        Reply

  6. rickey frison
    May 22, 2013 @ 06:45:03

    i just need a job. i,m not wording now and if you can help, please send me a email how .

    Reply

  7. Jack Tracey
    May 21, 2013 @ 16:30:53

    Sean: IT would be best if you give the act a chance rather than getting your information from Faux News and other unreliable sources.

    Reply

  8. Jack Tracey
    May 21, 2013 @ 14:25:54

    I have to say that I think your reply is short-sighted and potentially harmful to a company’s culture. First, you don’t seem to have enough information about the company’s options under the Affordable Care Act, including access to tax credits and lower rates through the exchanges that are being set up in most states.

    Second, you ignore the fact that Staffing Firms charge a premium price and that price will likely be adjusted to cover any additional expenses they will incur under ACA, particularly if they do not currently provide health benefits for their employees.

    Third, you also ignore the potential damage to company culture, cohesion and morale when X number of employees suddenly are not, but are temporary employees of some staffing firm. While some companies do not pay a lot of attention to culture, cohesion and morale they do so at their peril and would be wise to seriously consider how such changes will impact them over the long haul.

    Finally, I would propose that providing health insurance is an important benefit. While some companies have over-exaggerated how it impacts their bottom line — certain pizza chains come to mind — it is likely to be one of the best investments a company can make in its employees. A healthy workforce is a happy workforce. The ability to provide health insurance that doesn’t “break the bank” for employees, and to do so at a cost that really should be factored in to all companies employee benefits packages, is something no employer should pass up. .

    Reply

  9. Sharon Kelly
    May 21, 2013 @ 11:49:33

    I happen to like health insurance, for myself and my children. I would not take a job, no matter how small or large the company if it did not include affordable health insurance. Your HR manager is in essence telling her employees to drop dead, that health care is not her problem and employees are on their own. I bet this is a downer company to work for.

    Reply

  10. justanotherbizowner
    May 21, 2013 @ 10:42:57

    I find it telling the author frames it as “moving” rather than firing 7 full time employees. Temp services only offer insurance at a healthy cost to the temp employee who can lose it at any time as the assignment may end at any time by contract. If a company owner would rather create 7 unemployed Americans than ensure the workforce creating his profits is healthy and productive. The owner’s greed will be his company’s downfall. Simple math.

    Reply

  11. Mike Mark Sopp
    May 21, 2013 @ 09:09:11

    Businesses are going that far out of their way so they don’t have to offer health insurance? Wow.

    Reply

  12. sean bergbower
    May 21, 2013 @ 08:14:55

    why do we need the Obama care because it just screwing everybody up so get reed of it

    Reply

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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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