As 2014 and the implementation of the employer mandate or Shared Responsibility provisions of the Affordable Care Act (ACA) approaches employers are looking ever more closely at what it will actually mean to them in terms of financial exposure. Early predictions had employers—particularly employers with large numbers of low paid variable hour employees, such as restaurants, --dropping coverage because of the cost.
Over the past few months, proposed regulations have started to trickle out and flesh out what the rules will most likely be. Based on this preliminary guidance employers may be revising their strategy on dealing with ACA.
ACA requires employers with 50 or more full time or full time equivalent employees to offer affordable coverage providing minimum essential benefits to full time employees. Although part-timers may factor into to the determination of whether coverage will need to be offered, they do not need to get an offer of coverage. By carefully monitoring its “real” full time employees and controlling the hours of their part-timers, the numbers who need to actually get an offer of coverage may be more manageable than employers initially thought. Further, many low paid employees may find that with affordability measured as 9.5% of W-2 income it may be cheaper to decline coverage and pay the personal penalty. If they need coverage they may be able to join an exchange at a later date.
This article in today's Wall Street Journal discusses how some major restaurant chains that first feared huge health care costs are revising their cost projections downward. The reality of ACA implementation although not without an increase in health care cost may not be as dire as they feared.
By careful planning and working with knowledgeable advisors, employer can weather the implementation of ACA.