Some Truths About Obamacare Hit Home
May 23, 2013 Leave a comment
Earlier this week, a FaceBook post was put up by a local restaurant, concerning some information the business owner picked up when they “went to every single class on the Affordable Healthcare Act and how it will effect our/every industry…”, this past weekend, at the National Restaurant Association’s convention in Chicago, (got to love that irony!).
Their summary: “pretty overwhelming”, “it’s a tough, confusing road ahead” and “I’m just a little freaked out about some of the responsibilities and potential outcomes for our community”. What follows is an edited version of the points they provided in their post. Words in ALL CAPS were kept from the original post; italicised words are my own emphasis.
If you own a business and have ANY employees (even just one) there are things you need to find out ASAP. In October employers will become solely responsible for educating employees (in writing) on how the whole process works whether you are mandated to offer health care or not! Employers can be fined for not taking the proper steps to educate employees, whether existing or a new hire. Get the information you have provided signed and date by the employee as there are lawyers already setting up shop to represent employees that will feel cheated or miss out on opting in to plans because the employer didn’t explain it well enough.
There is a very detailed matrix for defining if you have 50 full time employees and it’s not about the number of people, it’s about the number of hours worked by all your employees. Seasonal (to a degree), holidays, vacation, and over-time are all added in. Full time is now 30 hours, so all employees who work over 29 hours will now be counted as full time.
How you schedule your employees THIS year will decide your business’ obligations for next year, so if you plan to make adjustments, you need to make them now.
The number of employees of all your business are combined, (not separated by EINs), so if you are considered to own any other business, all employees must be added to the matrix, (‘they’ are saying all LLCs with common owners will be combined). You are required to figure this out for yourself and submit your unit calculation, you will not be notified of your obligation and since the IRS is the watchdog on this program, you’ll want to stay ahead of the curve on knowing your obligations to lessen full audit possibilities. There is monthly reporting required with this!
You can opt to offer health care, even if you are not required to, for a tax credit (average 35% of cost). The standard is being estimated at $5-6K per employee, per year, with the employee contributing a maximum of 9.5% of their yearly income towards that amount and the employer paying the rest. The policy has dictated that at max, 9.5% of an employee’s total earnings is affordable.
Any employee refusing to take part in either an employer or State level exchange plan will pay an additional “tax”, which will go up quickly over the next few years.
Any business not providing good enough insurance at an ‘affordable’ rate will receive stiff fines, (up to $3,000 per employee that ‘affordable’ insurance was not offered to), and if you offer better insurance than most, you’ll pay a special tax for that too, which is a way to encourage everyone to keep it ‘standard for all’.
Starting next year, if you have that over 50 employees matrix, you must offer insurance to ALL full time employees by 90 days of service, no matter what your policy is now. No 6 month waiting period and no managers only. And if that employee quits, they lose their coverage with you, have to go to COBRA insurance [Anyone who has been in the position of receiving COBRA applications will tell you, affordable, COBRA ain’t!] and start the whole thing over with their new employer. The paperwork will be big on this one… no way around it!
Let’s look at the trickle down if I, personally, decided to voluntarily, (or was mandated to,) offer the NHC Act Insurance for all the employees at my two businesses:
~ I’ll have direct costs in the range of $37,000 (for two businesses combined) ABOVE what I pay now with what we currently offer our full time employees, PLUS we’ll have to add all the time in increased paperwork and CPA help with payroll calculations and determinations (ballparking $58,000 total direct cost/fees if 85% of my full time staff opt in). So where is that money going to come from? That’s quite a bit more than I brought home last year from both combined since most of our profits went straight back into the businesses.
~ Many of the businesses we deal with, (e.g. suppliers, grocers, repairmen, gas station owners, anyone employing over 50 people, or franchised stores, hotels, big lawn care companies, bank, etc.), will all be looking at similar cost increases, so they’re going to raise their prices, which will raise my purchasing/maintenance/fuel costs as a direct result. And their suppliers will raise their prices, ad infinity OR they will employ a mostly part time workforce (29 hours or less) and the quality of their service may deteriorate even though they’ll be charging me more for it, since their indirect costs will still be up.
~ Theoretically, suddenly many, many folks around us will have up to 9.5% less discretionary income, as that will be withheld from their paycheck, (or collected by the State Level Exchange), for the insurance OR many more may find themselves working two-three part time jobs, with little time to go out to dine or shop or find their schedules cut down to 27 hours from 32 or 33, (which in restaurants is a whole tipped shift gone!), AND almost everywhere they shop will raise their prices and so now the community’s discretionary funds will be lowered again. We’ll all get used to it, (or fold trying, or they’ll re-vamp the whole thing again), and folks that couldn’t even get past the application stage for insurance will finally be able to, which could be amazing for them, but IS it actually going to be affordable when you take into account all the trickle down expenses? I don’t know… I’m disappointed it’s not easier and doesn’t seem quite right, (who am I kidding? I was swearing like a sailor once I realized how complicated it all is and how much a burden it could put on so many, instead of being an option I could offer my staff reasonably… mandated or not), but I’m going to get ready, because it’s coming and I want to be responsible to the needs of my employees AND keep my businesses open and the jobs they provide viable.
I have been to the restaurant and love their philosophy of using local, in season, organic produce, and the owner provide great customer service and “get” social media, but I have to admit to a little schadenfruede, when I read the original post, since their politics, which they are only occasionally vocal about, definitely leans to the left.
As someone who has been unemployed a while, reading stuff like this is scary. I mean, I knew Obamacare was a dog of a law, but to see this. Its just going to screw people. And hard.