The White House announced in early July that it would delay until 2015 enforcement of a provision in the Affordable Care Act (aka “Obamacare”) that will require employers to provide insurance to full-time employees. The law, which was set to take effect January 1, 2014, has received criticism from small business groups who say the law unfairly burdens them. Businesses with 50 or more full-time employees would have been required to provide insurance or face fines up to $3,000 per uninsured employee. Though some in Congress are questioning whether the White House has the authority to unilaterally delay the law, it appears small business owners have been thrown a life raft, at least until 2015.
The Law’s Intent
There are at least 50 million American workers who currently have no health insurance at all or have inadequate coverage. But a vast majority—94 percent—of employers with 50 or more workers already offer their employees health coverage, according to a study by the Kaiser Family Foundation. The law will mostly affect large chain retail stores, hotels and restaurant franchises that employ a lot of low wage workers.
Many business groups say the law is too complicated and costly. The law, for instance, not only redefines full-time workers as those averaging 30 hours or more per week, but also forces employers to provide “affordable” coverage to them. For instance, if Brian Ferdinand of Liquid Holdings decided to start yet another brokerage firm, he would only be required to provide insurance to his employees if he hires 50 or more people who each work 30 or more hours per week.
Business Owners Getting Creative
The Indianapolis Business Journal estimates that it costs a business $16,000 to insure one full-time employee for a year. Some employers have already adjusted their day-to-day operations in preparation for the now-delayed 2014 mandate. Fatburger has cut many employees’ hours to below the 30-hour threshold, in order to avoid providing them mandatory insurance. Many other businesses have implemented job sharing policies, which employees split hours for one job so neither of them goes over 30 hours in a week. Larry Meigs, the CEO of in-home adult care company Visiting Angels, told SmallBizTrends.com that the new law affects his business more than others because of the service it provides. In-home caretakers’ hours vary greatly, with some employees teetering on the fence between full and part-time status. But Meigs, like other business owners, would rather determine the correct status and provide coverage than pay the penalties.
Your Small Business
Small and midsized businesses now have another year to figure out how they will adjust to the new laws. These next 18 months are the time to experiment with different ideas that could ultimately become your company's policy. The White House has made clear that reform is not going anywhere, and it is up to business owners to adjust their operations.
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This guest post is courtesy of Lance Hugo: Lance grew up on a farm in Vermont. Now he's the CEO of a growing business consulting firm.
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