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ACA – Affordable Care Act

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Are you as confused as everyone else about the Affordable Care Act (ACA)?  The big question that most employers have is what’s the bottom line?  What actually is their responsibility?  What does it take to actually get into compliance? And who really understands it and can give them the guidance they need to protect themselves?

First of all what is the purpose of Healthcare Reform?  It is intended to increase the access to medical coverage for all Americans.  Now whether or not that is being realized or accomplished is a whole other debate for another time.  However, it’s where we’re at and employers must be prepared.  And there are significant challenges and hurdles from the get-go.

First and foremost for most employers is the administrative burden as well as the cost to comply.  Let’s tackle the administrative burden first.  The legislative side of this Act is very complex and to this day not settled.  It’s a constant moving target or bouncing ball of changes, revisions, delays, and the evolution of ACA doesn’t look to end anytime soon.  In addition, there are a number of various governmental departments involved in the regulations and compliances from the Internal Revenue Service (IRS), Health and Human Services (HHS), to the Department of Labor (DOL).  And the employer is expected to be well versed and on top of it all whether it is implementation, employee communication, timing, penalties and fee etc.

Secondly the cost, employers are faced with the challenge of examining the total cost of providing a health insurance package to their employees at all or facing stiff fines an penalties.  So there is a huge dilemma that many businesses face, do they absorb the cost (which reports show could be as high as 50% increase in 2014 alone) or face the fines and penalties?  But employers also know there is another side of this equation and that is competition for good employees.  Second only to salary most employees consider the benefit package one of the primary factors in choosing their employer.  And essential to potential growth and reaching profitability goals recruiting and retaining good employees is paramount in seeing that realized.

In addition, small employers verses large employers are each faced with a different set of challenges.  Businesses considered in the small group market (defined as less than 50 employees) will be subject to adjusted community rating.  This process will now require insurers to set rates based on limited set of factors such as age, geographic area, and tobacco use.  Only limited variations will be permitted even with the application of those factors.  One of the big problems from this regulation is for a lot of small groups that historically would receive favorable health rates (groups with younger employee populations) will now see substantial rate increases.

On the flip side large employers (defined as 50 or more full-time equivalent employees) who do not offer full-time employees and their dependents minimum essential insurance coverage may be subject to an annual penalty of $2,000 per employee for every full-time employee, excluding the first 30 employees.  On the other hand, if a large employer who offers health coverage but the coverage is deemed “unaffordable,” or that does not provide “minimum value” may also incur a whole other set of penalties.

Challenges like these are one of many reasons why Professional Employer Organizations (PEO) has exploded in growth across the country.   Having experts that specialize in knowing what others simply don’t have to time nor the man power to keep up with is huge.   A PEO can provide an employer with various options to navigate through all the complex issues of ACA.  In addition, insuring that the employee’s are well communicated with and given the guidance they need to properly maneuver through what is expected of them as well.  Providing this type of peace of mind to employers is priceless.

Taking advantage of the PEO’s co-employer relationship and leveraging that relationship can be huge in a number of ways for businesses when it comes to this healthcare challenge.  Especially in two primary areas which are compliance as well as the cost factor.

As far as compliance is concerned there is no industry better than the PEO service.  Because of the client/PEO relationship through state and federal regulations, these types of services have a vested interest in making sure their clients are compliant with all governmental regulations.  Most PEO services have entire departments dedicated to keeping up with state and federal mandates and staying well versed on all areas that would affect their clients.  Not only keeping the client informed but also just as important making sure the employees of the client is communicated with and serviced too.  Providing everything from customize employee handbooks, training, workshops, seminars, and individual consultation.

The cost factor can also be a huge advantage in using a PEO service when it comes to healthcare cost.  Many PEO’s have master large group policies where they use economies of scale an pool all their clients together for better rates.  These plans are compliant with government regulations and are very competitive compared to a business going out to the open market for a stand alone group plan for their company.  Either way the PEO can provide both options for the employer to determine which plan types are the best choice for their needs and goals is.

So between the savings on health premiums and as well as the huge savings in Worker Compensation premiums (as much as 30 – 40%) a PEO service is a slam dunk for many businesses especially in the oil and gas industry.  Most times than not cost is far below what the business can do these services in-house themselves.  Not to mention the huge liabilities that is shifted from the client to the PEO as well.  And finally, allowing specialist to take care of the non-revenue side of the business yet vital areas key to business owner’s success is significant.  

So the bottom line, the employer is not a lone in facing these challenges, there are specialist available with your best interest in mind.  It might be well worth your time to at least do a review or analysis of the services they can bring to your business to see what kind of benefits you can enjoy.  Contacting a PEO brokerage firm to find the PEO service that best fit your business needs is essential.  Every PEO is different in the various services they provide and how they provide them.  A strong PEO brokerage firm can save you a lot of time, money, and head aches in this process.  The great thing is it doesn’t cost you a dime other than your time and you might be very surprised!  Many have called it a tremendous competitive edge!

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