Blog PostDecember 11, 2013

Impact of health care law on businesses to be felt in 2014

CEO troubled by mandate that compels companies with 50 employees to offer coverage or face penalty

Author: Jeremiah Shelor

Publication: The Exponent Telegram


CLARKSBURG — Implementation of the Affordable Care Act has begun, with individuals already enrolling in new health insurance plans.

But the impact of the law on the area’s businesses will only start to become clear over the coming year, as companies renew their group plans, or, for those employers affected by the law’s new mandate, face the prospect of offering plans to employees for the first time.

One of the more notable aspects of the new health care law is the mandate requiring companies with 50 or more employees to offer all full-time workers health insurance or face a penalty. The law defines employees who work 30 hours or more as full-time.

This requirement troubles John Slavic, CEO of the Slavic Group of Companies and a member of the Job Creators Network Foundation, which seeks to educate people on issues affecting small businesses across the nation.

Slavic said his company has collected data from other companies they advise, giving him insight into their hiring practices.

“There is a definite hesitancy on the part of smaller firms — generally that have 50 or fewer employees — to hire,” he said.

Slavic expressed skepticism over the report released by the Labor Department on Friday announcing the creation of 203,000 new jobs.

“If you dissect that number, you’ll see that roughly three quarters of that number are part-time jobs,” Slavic said.

Slavic said he attributes this to the new health care law, which makes hiring full-time employees costly for many employers.

Even though the mandate has not yet taken effect, Slavic said he believes companies are already cutting costs preemptively.

“I believe employers are now factoring in the additional cost that they’re going to be incurring for the health care benefits into a suppression of real wages,” he said. “As a result, the Affordable Care Act is not only proving to be deteriorating the number of jobs, but it’s also siphoning off the ability of employers to pay more.”

“No matter how you slice it, the pie is only so big,” Slavic added.

Slavic said mid-sized businesses are likely to be most affected.

“It really does zero in on the smaller employer who is either at or approaching that threshold (of 50 employees),” he said.

But those companies who were already providing health insurance to their employees are also likely to be hamstrung by fewer options regarding health care plans, according to Brett Hamilton, a financial advisor and insurance broker based in Charleston.

Hamilton said that, since the implementation of the Affordable Care Act, health insurance companies have reduced the number of group plan options being offered to employers.

She said that for employers looking to purchase coverage for their employees, more choices are better.

“It’s easier for them to give and take a little bit more on the plan design and the price but still be able to offer coverage for their population,” Hamilton said. “We lost the small steps changes that we were able to make to better suit a company.”

Hamilton put it another way.

“A lot of times, the goal with the company is always trying to balance making sure that (they) have good coverage but also making it affordable enough that the company doesn’t feel like they have to go without,” she said. “We have less ability to balance now.”

Hamilton said she expects employers with a high turnover rate will struggle with a new provision requiring employees to be enrolled in company health plans earlier than before.

“If you’re in an industry that has high turnover, you’re just constantly doing administrative paperwork,” she said. “Certain fields require a little more testing of the employee to see if they’re going to stay with it.”

Echoing Slavic’s assessment, Hamilton seemed to agree that many companies may try to avoid the headache of offering insurance plans altogether, saying those who “were maybe considering hiring a full-time person … now they’re seeing if they can get two part-timers.”

Hamilton’s advice for business owners worried about how the Affordable Care Act will affect them?

“What I would say is, talk to someone like myself, or their insurance person, sooner rather than later,” she said.

Hamilton recommended companies contact their insurance brokers at least two to three months in advance of the renewal date for their group plans.

“You’re going to want as much heads-up time to deal with any changes that you have to respond to,” she said. “You’re not going to want to wait until the last minute.”

Staff writer Jeremiah Shelor can be reached at (304) 626-1404 or by email at [email protected]