By John Swanciger of Manta
This new year brings new challenges for small business owners. January marked the start of a new Affordable Care Act (ACA) mandate that requires companies with 50 or more full-time employees to offer health insurance or face penalties that can exceed $2,000 per employee. While businesses with fewer than 50 workers remain exempt, the new rule affects a significant portion of the small business community.
(Photo courtesy of John Swanciger)
At the beginning of last year, the ACA went into effect for businesses with 100 or more workers, while companies with 50 to 99 employees got an extra year to prepare. Given that the health care law requires employers to bear some of the provider costs, entrepreneurs are getting serious about the inevitable impact to their bottom lines. While only about 5 percent of small business owners listed health care as a top concern in 2015, that number jumped to 22 percent in 2016, according to Manta’s Wellness Index.
For businesses under the 50-person mark, the new rule is forcing them to reconsider their hiring and growth strategies. In fact, 22 percent of small business owners said the Affordable Care Act has disrupted plans to grow their business, according to a separate 2015 Manta health care survey of small business owners. Moving forward, business owners will need to weigh the benefits of growing their businesses against the costs of hiring and offering insurance to more full-time employees.
Some opponents of the ACA argue the law encourages small businesses to cut full-time workers and hire more freelancers or part-time employees as a way to avoid offering health care. According to the same Manta survey, 20 percent of business owners said the ACA has disrupted plans to hire more full-time employees. As time goes on, the extent to which the law truly affects small business hiring and growth will become much more clear.
Complications Surrounding The ACA
It’s nearly impossible for hard-working small business owners to keep up with the many changes in health care rules and regulations. Adding to the uncertainty and confusion is the impending 2016 presidential election. Republicans have vowed to repeal Obamacare, while Democrats have pledged to reform and expand it. Small businesses should do their best to stay nimble and prepare for the unexpected as changes to the law are likely to continue.
Adding to the cost of offering insurance are the additional administrative requirements the law puts on small businesses. Under the ACA, companies must file new, complex tax forms with the Internal Revenue Service that provide details on how many employees they have, how many hours they work and any health insurance offered. Gathering all this data requires meticulous record-keeping, but is crucial to maintaining compliance.
Tips For ACA Compliance
Adopt an automated employee management system. Having one integrated electronic system for both payroll and benefits allows small business owners to track the data needed to complete the required ACA documentation and maintain compliance. An automated payroll system can identify whether an employee works enough hours to be classified as full-time, and therefore must be offered coverage. An electronic system can also determine whether an employer-sponsored plan is affordable based on wage and salary information while tracking the coverage type and benefit offer date. Without an automated system, tracking all this information can take hours. If done incorrectly, the result can be a fine or a time-consuming audit.
Take advantage of community resources. Owners should look to their communities to help address concerns and navigate the shifting small business landscape. Your local chamber of commerce can help you understand the regulatory changes and provide a number of resources to help owners meet the ACA requirements. Networking with other industry professionals in your area who are willing to share what they’ve learned through the process can also help you make smart decisions.
While many aspects of the Affordable Care Act remain up in the air, it’s important for small business owners to strive for compliance. Given the complex and shifting nature of the ACA and competing political interests, small businesses should do their best to remain flexible and prepare for the unexpected. Stay aware of changes and, if necessary, reach out to professionals for expert guidance.
John Swanciger is a seasoned technology executive with vast experience in team building, product marketing and strategic partner development. As CEO, he leads Manta to strengthen its current offerings, while expanding products and services for a growing customer base of small business owners. John brings more than 15 years of industry experience working with high-growth business-to-business and business-to-consumer companies, including Accenture, Hotwire and Starwood Hotels & Resorts Worldwide, Inc. Most recently, he was responsible for product marketing, sales, business development and partner relations as Switchfly’s chief commercial officer. John is a board director at Liftopia and received a bachelor’s degree in finance from Boston College.
The views, opinions and positions expressed within this guest post are those of the authors alone and do not represent those of CBS Small Business Pulse or the CBS Corporation. The accuracy, completeness and validity of any statements made within this article are verified solely by the authors.