I don’t know if anyone has noticed, but healthcare – and the Affordable Care Act in particular – has been in the news quite a bit lately.
That got me thinking about employer responsibility requirements.
Maybe you’ve already heard about these requirements. Under the ACA, “large” employers with 50 or more full-time or full-time equivalent employees are required to offer healthcare to all of their full-time employees. If they fail to comply, the employer must pay a $2000 penalty per employee.
For most companies, this isn’t too big of a deal. Either you’re a small business and don’t need to worry about this mandate, or you’re large enough that you can afford to offer your employees health insurance. (In fact, the Kaiser Family Foundation reported back in 2013 that more than 9 out of 10 businesses with over 50 full-time or full-time equivalent employees already offered healthcare before the ACA took effect.)
But I have a number of business clients hovering right around 50 full-time employees. They exist in an unfortunate sweet spot – they’re too big to be small, and too small to comfortably afford to offer comprehensive benefits. Some of these businesses can barely make payroll every two weeks as it is – there’s no way they could take on the added expense of paying for health insurance for their employees and their dependents. What’s more, every person they have in their employ is vital. There are no excess employees.
It puts me in an uncomfortable position. I feel a professional obligation to my clients to advise them to get below 50 employees. But even though that’s the best business decision, it’s not a very nice human decision. I don’t want anyone to lose their livelihood. To make matters worse, the first people to go are usually younger or less skilled workers, often on the first rung of the ladder of success. People like my kids. And by losing their jobs, they’ll lose their means of support and could end up living with their parents or depending on social programs.
But if my clients can’t afford to offer health coverage, I can’t in good faith recommend that they suffer the consequences and pay the $2,000-per-employee fine. What’s more, the Affordable Care Act has effectively made tax preparers like me the compliance officers of the federal government. It is the tax preparer who must indicate on the return that the taxpayer did not comply with the law, and it is the tax preparer who will compute the shared responsibility payment.
I guess everyone in Washington is right: Healthcare is hard.
I’d love to hear what you think: Should the employer responsibility requirements stay or should they go?