The Patient Health and Affordable Care Act (ACA) has continued to have lasting repercussions on businesses and individuals alike, but typically small businesses are impacted most. The vast majority of businesses watch rates climb, even as they struggle to keep up with previous hikes.
In addition to paying higher renewal costs, employer mandates can be confusing and the consequences of failing to meet them can be disastrous. Fortunately, there are ways of providing employees with ACA-compliant coverage without having to skimp on other important matters. Business owners can mitigate the frustrations caused by the ACA with the help of a PEO like Lightsource HR.
Understanding Your Responsibilities
Your exact health insurance rates are determined by factors such as who your employees are, how many you have, and how often they work. Every business owner should be aware of the 50 full time employee mark, which is essentially where you need to start worrying about Obamacare provisions. If you’re not keeping careful track of these numbers, you may make some costly mistakes during the onboarding process.
Each additional hire may push you out of your current bracket and into a new one with new rules. Say you work with a variety of part-time employees that do not receive the same benefits as your full-time crew. Under the compliance laws, you still need to total up the number of hours they work to determine the how many full-time employees you have (e.g., if you have 4 employees that work 10 hours a week each, then that would equal one extra full time employee.)
Employers whose labor force performs a lot of hazardous work may see their rates climb even further this year. This is expected as health insurers attempt to mitigate their own losses. Dependent coverage must be offered now, whereas before small businesses were only expected to provide for the employee. You’ll also need to take part in non-discrimination testing, which is a way to ensure that none of your financial or health care offerings are favoring the Highly Compensated Individuals in the company. These tests involve complicated testing and calculations, and can be extremely time consuming for businesses to complete.
The Challenges and the Consequences of Falling Short
The above examples only scrape the surface. The exact nature of these alterations can be mind-boggling, even for people who deal with them on a daily basis. The definitions change, the parameters change, and the state powers’ change too. For example, states can now change the definition of a small employer to any business with 100 employees or fewer. The federal government sets the limit at 50. It’s an employer’s job to keep up with everything, but the costs of it all can be staggering.
Regardless of how difficult it may be to keep abreast of everything, failing to do so is even more costly. The Employer Mandate for businesses with 50 or more employees requires them to provide qualified plans to all full-time employees. Failing to do so can result in thousands of dollars in fines — $2,000 for every employee that doesn’t have coverage. In contrast, those who are able to take full advantage of the annual enrollment period can ensure that they stay compliant without risking a tax penalty.
Using a Professional Employer Organization to be ACA-Compliant
The best of small business tax credits typically go to companies with under 25 employees, which means that slightly larger companies may have to look for outside help to cut costs. A small business of 60 employees may have the same requirements as a business with 90 employees. This places uneven amounts of responsibility on two businesses in the same category. A Professional Employer Organization attempts to even out these discrepancies, so companies can enjoy a more level of playing field.
A PEO like Lightsource HR can alleviate both the financial burden and the administrative headaches of the ACA by combining your business with other small businesses for better overall rates. Lightsource HR will need to become a co-employer to your employees. Sharing the responsiblity means you come under our larger umbrella. Essentially, you get a break on your rates, and you don’t have to make the lengthy policy and premium adjustments every time a new addendum is introduced to the ACA.
With this kind of employer shared responsibility, it’s important to remember that you still get to keep the same control you do over company decisions. We will not dictate who you hire, how you conduct your daily affairs, or how much you pay your employees. We’re here to keep the IRS at bay, streamline the open enrollment period, and provide valuable advice about the best routes to take. A co-employment scenario gives you the means to communicate effectively with the Benefits Administration that you’ve lived up to your side of the bargain when it comes to the latest health reform laws. We simply make it easier to do.