Businesses of all sizes are anticipating the additional costs and changes of the Affordable Care Act’s (ACA) twice-delayed employer mandate when it finally goes into effect – in 2015 for businesses with more than 100 workers and 2016 for those with 50 to 100 employees.
Cherry Bekaert Benefits Consulting (CBBC) recently released results of a May 2014 online survey of more than 200 businesses in the Southeast that sought to learn how ACA implementation would affect hiring practices, costs of employee health coverage and the bottom line.
While the survey was anonymous, Cherry Bekaert said industries represented include a physician practice, software developer, equipment distributor, chemical manufacturer and coatings technologies company.
Roughly 25 percent of respondents said they were hiring more part-time workers in response to the employer mandate – a number Cherry Bekaert found surprising, said CBBC partner Kevin Quinn.
Current law defines a full-time employee as one who works at least 30 hours per week, while many businesses considered 40 hours per week as full time. In April, the U.S. House passed H.R. 2575, a bill that would define a full-time workweek as 40 hours. The Senate, however, has not taken up the bill.
Quinn said 25 percent of businesses surveyed said they were considering eliminating employer-sponsored health care coverage altogether, another response he considered notable. Under the ACA’s employer mandate, employers who do not offer coverage must pay a fine based on the number of workers the company employs. At this point, employers with fewer than 50 employees could eliminate health benefit plans because some of their employees could potentially qualify for subsidies. For employers with more than 100 employees, however, the decision required more deliberation because benefits are tax deductions, but the ACA fines are not, said Quinn.
Health plan designs are changing, Quinn said. Employers have to strike a balance when setting the level of employee contributions because some employees are having to pay a higher cost when they seek care, which results in a “double-whammy.”
Approximately 83 percent of business owners also believe the ACA implementation will put “upward pressure on medical plan costs,” according to the survey. Roughly 73 percent say the legislation will negatively impact profits.
About one quarter, 25.7 percent, of businesses surveyed said they are reducing other benefits, like dental, vision and life, to counteract rising medical plan costs.
Quinn said Cherry Bekaert plans to conduct the survey annually to track attitudes along with the implementation of the ever-changing law.