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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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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