Small businesses owners face tough decisions every day; balancing employee benefits and financial prosperity is often one of those tough decisions. Employers wanting to offer their employees benefits have often been discouraged by too few choices, high premiums, and unpredictable rate changes. However, with the Affordable Care Act, (like it or not), things are changing and you have responsibilities as a business owner. Are you educated and prepared for the upcoming changes?
62% of small employers acknowledge not understanding exchanges at all (eHealth, Inc., March 2013)
In an effort to become more educated and prepared, I recently attended an Affordable Care Act forum at Southern NH University. If you haven’t had a chance to attend a seminar, I hope that some of the information and resources provided in the post will help get you started in the right direction. First, let’s review some basic information:
- Enrollment begins October 1st
- Coverage doesn’t begin until January 1st
- The rules are different if you have 50 or fewer employees
- There is a tax credit for business with fewer than 25 full time employees
- Noncompliance puts you at risk for a penalty
Starting in 2014 under the Affordable Care Act, insurance companies will have to play by a new set of rules. Insurance companies will no longer be allowed to charge higher rates for women or individuals with pre-existing conditions. They will also no longer be allowed to deny coverage to individuals with chronic and pre-existing condition or place annual dollar limits on coverage.
These are only a few of the health care changes that will be starting in 2014. If you are ready to learn more, I encourage you to get more information straight from the source such as the IRS, and state department of insurance, rather than a third party. With that said, here are some links to more information:
With pieces of the Affordable Care Act (ACA) about to go into effect, this is a good time for owners to look at the small business benefits they offer to employees.
Small business owners are struggling with rising healthcare costs, and balancing the financial implications to their company with keeping their talent happy. How do they know the right mix of benefits? When should they ask employees to be responsible for a bigger piece of the cost? Employers are hesitant to small business benefits, yet absorbing the ever-increasing costs are hurting their bottom line.
Back in my corporate days when I oversaw Human Resources, creating the benefits package honestly felt like we were gambling with employees’ financial and health future. The health insurance co-payment and
deductible could have significant financial impact in family lives. While young employees often see little value in life and disability insurance, their potential impact is enormous, although hopefully less called upon. Retirement benefits are increasingly more important to employees, yet business owners often believe retirement to be cost-prohibitive. How do business owners know what the right decision is?
Ask. As in your employees – the people you are trying to help. Personnel costs are often the largest expense and can potentially have the most significant impact on the success of your business so you need to get it right. Yet all too often the benefits’ decision is made in a vacuum, without the input from the people they’re designed to benefit! Ask your employees what healthcare elements are most important to them – out of pocket costs, routine coverage, or catastrophic coverage. Tell them that you will make the decision but that you would like their input.
At first glance, this process may seem risky to your bottom line. Compare headcount costs as a percentage of revenue over several periods; is it growing? Flat? Decide what your business model and you, the business owner, can live with for headcount costs. As long as benefits fit within that framework, and you’ve gotten input from your staff, don’t stress the details. Ask employees’ to share in the costs from the get-go and always let them know the benefits’ cost that the business is picking up.
Retirement plans have the feel of being expensive, yet with the tax credit now available for setting up a plan (check http://www.irs.gov/publications/p560/ar01.html for an overview) a 100% employee-funded plan can have no financial impact to your business. While employer contributions are not required under all types of plans, the contributions are tax-deductible and are a relatively low cost/high value benefit.
Don’t underestimate the value of group life insurance and long-term disability. These costs are miniscule compared to health insurance and yet have the potential to save an employee’s family. While not often called upon, these provide peace of mind to your staff. Peace of mind means your staff can be more focused on the task at hand – growing your business.