One of the most frustrating and confusing things in the world of business for the last few years has been the Affordable Care Act, or better known as “Obamacare”. When I went to work for a medium sized franchising and consulting company last year I learned quickly that they had adopted a “wait and see” policy when it came to Obamacare. Basically they were waiting and seeing if it would be overturned so they wouldn’t have to deal with it, but that never happened. Now people are quickly running out of time, companies with more than 100+ full-time employees (“FTE”) will be expected to be compliant in 2015 and companies with 50+ FTE’s will be expected to be compliant by 2016. The flood is coming, and hiding in caves won’t save you from the dangerous $2000 and $3000 per employee fines that employers could be liable for if they don’t address this issue.
Unfortunately a 500 word blog cannot tell you what Obamacare is, or exactly how it will impact your company. I’d probably spend 1000 words just describing how the $2000 fine may be implemented, and another 1000 words on how the $3000 fine may be implemented. What I am going to do instead is describe an action plan that will get you on the right track and hopefully help you figure out a way to still keep your bottom line looking good after you fully implement Obamacare into your company.
Step 1: Do you have 50 or more FTE’s? Because if you don’t you might as well stop reading and go relax, because Obamacare won’t apply to you. How do you know if you do or don’t? Well count you total employees over all the entities you have an ownership stake in. If this number is over 50 continue to the next step, because while you may not actual have 50 or more FTE’s, you’ll need to take additional steps to make sure.
Step 2: Are you using a payroll system like ADP or Paylocity? If you are, these systems have built-in capabilities for assessing how many FTE’s you have in each company, which can then be added together (if you own more than one company) with any other companies that would fall into your control group.
Step 3: What is a control group? A control group can be a group of companies that are similarly related due to ownership as to constitute one company for the application of Obamacare. This basically is set in place so someone won’t create 10 different LLCs and place 49 employees in each so as to not meet the 50 employee requirement for Obamacare. Assessing which companies may fall into a single control group is best assessed by professionals, which takes us to…
Step 4: Contact an Insurance Broker or your company’s Insurance Provider. Now that you have the reports from your payroll system (and even if you don’t) Time to contact the people who deal with this for a living. Insurance Brokers will be able to price out different options that you can offer (if you have to) therefore giving you the bottom line of what it will cost you. This allows for decisions to be made, and will give you time to perhaps sell off a company if it’s more cost effective and would bring you below the employee threshold.
Step 5: After Assessing your options take action. Don’t trip at the finish line, now that you have all the information, pull the trigger. There are tricks to bring the size of your control group down, and talking to an attorney about a possible restructure may be in-order if you find Obamacare may cost your company more than you can truly afford. But I can promise you, you definitely can’t afford to ignore it.
Warning: This information is not intended to constitute legal advice and should not be relied upon in lieu of consultation with appropriate legal advisers in your own jurisdiction. It may not be current as laws are subject to change.
