Healthcare Law Impact

As you certainly know by now, the results of the November 2012 election made it a certainly that the Affordable Care Act (Obamacare) will be implemented over the next couple of years. Just what does that mean to you?

A Nightmare

This law will have major effects on nearly all businesses, particularly those with over 50 employees. The requirement for employers with over 50 employees to provide health care or pay a fine creates a dilemma for many. Some will decide that the increases in premiums that are expected present an unacceptable financial burden for their business and elect to pay the penalty. This of course presents two problems. One, the company may lose some of its appeal to potential and existing employees. Two, the employees may find themselves thrown into the individual insurance market facing premiums they cannot afford. On top of that there are administrative requirements to show an employer is incompliance with the law. Essentially it will be a nightmare for employers to make the correct decisions and document compliance.

Employee Impact

I already mentioned above that employees may find themselves shopping for individual health insurance that they will find unaffordable. This can happen from at least two things. Firstly, a small employer may decide to cut some employees to stay below 50 in total in order to avoid the requirement to provide healthcare. Secondly, since the law defines the 50 employees as full time (that is working 30 or more hours per week), many employers will begin to cut back on hours worked to keep employees under 30 hours, Thus the employee experiences a double whammy – less income and having to buy their own health insurance. So employees need to remember that they will likely be facing at least some of the healthcare law impact.

The Hidden Opportunity

Believe it or not, there are some opportunities hers. On the employee side, more will elect to work for more than one company in order to earn what they need. The positive of this is that they do not have all their eggs in one basket.

For businesses this is a time to take a serious look at efficiency and how to control costs more effectively. They may decide to use two or three part-timers to perform one role. The advantage here is that they have more than one person trained to perform the job. Also, over time most companies seem to become complacent in making sure everyone working for them is fully utilized during the hours they are at work. While some are overworked, others seem to be under-utilized.

Additionally, companies will likely find it beneficial to contract out work that really does not require a full time person. This could be anything from a clerical role to a professional role. AimCFO provides part-time CFO and Controller services as this is often an area where a company really does not need or can truly justify hiring a professional on a full-time basis.(See Spend Wisely – Go Part-Time, CPA Firm or CFO-Which Do You Need?, and Part-time CFO for a Startup for more thoughts on this).

The Bottom Line

Although it will vary from one business to another, most will find in some way they will have to deal with the healthcare law impact.

If you want to know more, contact AimCFO – Contact

As always, your comments are welcomed.

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