Running a business like Dickey’s Barbecue Pit or La Duni Latin Cafe is about to get more complicated. There are still a lot of unknowns when it comes to the Affordable Care Act (also known as ACA or Obamacare), but there is general consensus that it will have a big impact on businesses.
Starting in 2015, businesses with 50 or more full-time employees will face fines if they don’t provide affordable health insurance for workers. We spoke with Joyce Gaines, a senior consultant at Alkali Benefits in Plano, to find out more.
Large employers (50 or more employees) will be required to provide both “adequate” and “affordable” coverage.
Coverage is considered “adequate,” Gaines says, if the employer covers at least 60 percent of the “total employee-only plan cost,” which includes premiums, deductibles, co-insurance and co-pays.
Coverage is considered “affordable” if the employee doesn’t have to pay more than 9.5 percent of his or her modified adjusted gross household income.
Large employers will have three ways to meet the requirement of providing “adequate” and “affordable” coverage.
- They can customize their plans.
- They can pick a qualified health plan on the marketplace designed to pay a minimum of 60 percent of the total employee plan cost. Employers, like individuals participating in the health marketplace, will be able to choose a level of coverage – from basic bronze to mid-level gold to full-blown platinum.
- They can give each employee money to buy insurance that’s the “best fit.” This is also known as the “defined contribution” plan.
(Employers with fewer than 50 employees won’t have to provide health care, but the act gives them incentives to do that. For example, employers with no more than 25 employees, earning less than $50,000 on average, can take advantage of the Small Business Tax Credit.)
Each business will be affected differently.
Joyce Gaines sorts business into three categories:
- ACA “disadvantaged” — companies that have healthy, young, low-paid workers, such as restaurants and manufacturers, will take the hardest financial hit.
- ACA “advantaged” — firms with older and sicker employees who use medical care a lot will get the best return on investment from the ACA.
- ACA “Neutral” – larger companies with high-skill and high-wage jobs (e.g. law firms) that are already paying for robust benefits will not have drastic changes in their bottom line.
Employers (and employees) need to stay updated on changes in the ACA.
Gaines says employers need to find a competent health-care broker who is well-versed about the ACA and who provides updates as they unfold. In addition to getting information from their employers, employees can find useful tips on BenefitMall and the Kaiser Family Foundation‘s website.