By Ryan Cates
Corporations and small business owners are facing a great deal of uncertainty regarding the Affordable Care Act (ACA). While many of the more significant requirements of the ACA go into effect in 2014, many executives and human resource directors are scrambling to adopt and implement policies that ensure labor compliance and maintain a profitable pathway.
So, what are the new laws set forth in the ACA? What accountability and oversight regulations do we face? And lastly, but perhaps most importantly, what can a company do NOW to prevent costly compliance and penalty issues down the road? As someone who consults with operational executives throughout the country, I set out to get answers.
I reached a few conclusions that provide a defensive strategy for companies concerned with the potential costs associated with the ACA and the growing number of regulations facing employers throughout the U.S. Here’s what I found…
“Affordable” Health Care Defined
One of the most controversial regulations of the ACA is the mandate that companies with more than 50 full-time employees shall provide “qualified” health coverage for all their full-time employees, or pay an annual penalty of $2,000 per full-time employee. If a company does provide such coverage but it’s not “affordable,” the penalty is $3,000 per employee. Affordable is defined as less than 9.5% of the employee’s family income. In a recent Forbes article, “Why Obamacare Incentivizes Part-Time Jobs,” Robert Book explores how the penalties associated with this mandate will reduce profit margins and drive higher prices. To read his article in full, click here.
Government Oversight and Enforcement
So how is government going to oversee and enforce the regulations and penalties associated with the ACA? That is a question that is open to interpretation and it will be nearly impossible to know.
However, President Obama’s own administration cites that the new tax rules and regulations will create Internal Revenue Service compliance burdens that will add nearly 80 million man-hours each year to individuals and businesses. Critics point out that the IRS compliance burden is the tip of the iceberg. With agencies such as Health and Human Services and the Department of Labor, the fear is that additional and duplicate oversight and regulations will continue to add unparallel compliance burdens on corporations, small businesses, and individuals.
A Moving Target
What can we expect in 2013? To date, there are over 2000 proposed amendments to the ACA, accompanied by numerous advocacy groups lobbying for changes and exemptions. Other groups and states are outright challenging the ACA in court.
To add to the notion that everything is far from settled, The Obama Administration recently announced a compromise to its requirement that employers cover contraception in their health insurance plans. The updated policy, as described in the Wall Street Journal, basically spells out a way for employers with religious objections to avoid funding the mandate. Instead insurance companies handling the policies would be responsible for informing employees and covering contraception with no out-of-pocket expenses. The revised policy does not provide relief for non-religious affiliated companies whose principles object to contraception coverage.
Protecting Your Company
As is the case in sports and in business, the best offense often involves an aggressive and timely defensive move. In the case of the ACA, it becomes a question of whether you can afford to “wait and see” before you take action. And considering the cloak of uncertainty surrounding labor laws, what actions can you take at this point?
Shifting the risks associated with the ACA to an on-site outsourcing partner is a solution that is gaining momentum in labor intensive operations – especially those needing a flexible workforce to meet peak season demands. Outsourcing a significant portion of your hourly workers has many benefits, including eliminating ACA penalty risks and the administrative burden of compliance.
Beyond considering outsourcing, every company should take the time to do some homework regarding the implications of the ACA. Good resources include:
- The Society for Human Resource Management (SHRM)
- America’s Health Insurance Plans (AHIP)
- Your local or state Chambers of Commerce
- Government Websites: www.healthcare.gov and www.irs.gov/uac/affordable-care-act-tax-provisions.
In short, the ACA is hard to understand, lacks imperative regulatory details, and is likely to undergo radical changes before the majority of its regulations can go into effect in 2014. The question becomes, are you going to take action NOW to avoid negative consequences down the road?
Ryan Cates is Vice President of National Sales and the SE Region. Ryan joined nGROUP in 2006 to facilitate the company’s growth in the Southeast. Since then he has grown from regional business development into a national sales role, with regional operational responsibilities.