Healthcare Laws for Employers
Healthcare laws for employers have become vastly more complicated over just the past few years. As the Affordable Care Act (Obamacare) provisions have come into play year by year, employers are finding themselves having to make changes to their organizations to minimize the costs that the many new healthcare regulations impose on employers.
Now that 2014 has arrived, the bulk of the new regulations have now come into effect. While a comprehensive review of the law is far outside the scope of this article, I will address some of the most important items of concern for employers.
For companies that employ less than 50 people full-time, no coverage is required to be provided by the company by law. Likewise, for companies of between 50 and 99 full-time employees, the coverage requirement is suspended until January 1, 2016, upon which date they will be required to provide the coverage. Companies with 100 or more full-time employees are required to provide coverage for at least 70 percent of them by 2015. No company is required by law to provide coverage for their part-time employees.
Healthcare coverage must be considered affordable, which is currently defined as costing 9.5 percent of family income or less. Full-time employees who pay more than 9.5 percent of their family income for their coverage qualify for a tax credit to reduce their healthcare expenditures. The coverage must also be considered comprehensive, which means that it must pay for at least 60% of the covered healthcare expenses.
Penalties are assessed on the basis of the number of full-time employees in the company. The penalty for a company that’s required to provide healthcare coverage and doesn’t is $2,000 per full-time employee. In addition, employees who receive the tax credit cost their companies $3,000 per head.
While there were many employers in the U.S. who provide health coverage for their employees before the Affordable Care Act, the enactment of the law changes everything. The extent to which this is a good or bad thing depends on who you ask. On one hand, the law means that full-time employees will be guaranteed a basic minimum of health coverage, but on the other hand, the massive increase in cost and complexity to employers could amount to a major blow to the economy.
Already, there are companies announcing rounds of layoffs so that they can get their employee count under 50 to be exempt from the coverage requirements. Others have cut the hours of their pull-time employees, effectively turning them into part-time workers, because they’re not require to pay coverage for part-timers. In addition, because health coverage is so expensive, even under the Affordable Care Act, some employers may opt to pay the fees of $2,000 per full-time employee rather than provide the coverage. This may seem like a petty thing to do, but a lot of these companies operate on thin margins, and if providing coverage costs even $1,000 more than pay the fee, it may make sense for some to pay the fee.
Healthcare has become a divisive issue in this country over the past few years, and all sides feel passionately about the issue. Many people disagree with the basic premises of the law itself, and others think it’s the best thing to happen in the country for a long time. The question is, can the country make it work, or will it crash and burn?
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