I recently blogged about 5 tips to avoid the Obamacare health insurance employer mandate. That’s the one that requires employers to offer health insurance to their employees if they have 50 or more full-time employees.
Since that time, I have learned more about the law. Of course, it turns out to be a killjoy. It’s not even that it eliminates loopholes. It’s that the law crashes into seemingly every employment scenario like an iron fist, forcing you to go along with it or be shattered.
Again, disclaimer: I’m not a professional, so consult with one before you do… anything…
Here were my 5 suggestions:
1) Split your business in two
2) Fire a few people
3) Outsource a few tasks
4) Contract laborers
5) Move some/all of your employees to part time
Here are the reasons why most of those, it turns out, won’t work:
1) The law understands businesses as “Control Groups.” And for the sake of the 50-employee count (if you have 50 employees, you have to provide them with healthcare), it doesn’t look at each business separately; it looks at each business-owner separately, and asks, “How many employees, total, is he or she over?”
In other words, if you own a construction business where you employ 20 people, and also a restaurant where you employ 30 people, you fall within the 50-employee minimum requirement for providing them health insurance.
2) This will probably not work. Because it’s probably too late… you should have done it several years ago.
What I mean is, the IRS has what’s called a “Lookback Period.” They can look at your employment rolls and other info for a period of 3–12 months, or even longer. And if they suspect that you fired people just to avoid the mandate, WHAM!
This is what the law calls “Anti-Abuse Provisions.” The question remains as to who’s really being abused.
3) You could possibly do this. But again, be careful of those Anti-Abuse Provisions.
4) Same here.
5) This is actually a real possibility. But it’s also possibly a real headache.
Note that Obamacare is a historic bill not only because it was signed by a black man and because it means national healthcare, but because IT IS THE FIRST TIME “FULL-TIME EMPLOYMENT” HAS EVER BEEN LEGALLY DEFINED IN THE USA.
Full-time employment means working at least 30 hours per week.
Now that you’ve finished laughing… and crying… here’s what that means:
You’re going to have to do a lot of shuffling around to get lots of people under 30 hours per week. Also, your employees are going to be less than satisfied, and you’ll likely have a higher turnover rate.
Additionally, you should be aware of a little something called “Full Time Equivalency,” or FTE.
FTE is another neat trick in Obamacare that magically turns your part-time employees into full-time employees, without giving the employee any added value. Here’s how it works:
You add up the total number of hours worked by all your part time employees in a month, then divide by 120 (which is the minimum hours a “full time” employee would work in a month – 30hrs/wk for 4 weeks = 120 hours a month). The number you end with is the number of “Full Time Equivalent” employees you possess.
If you have, say, 35 full-time employees (working 30+ hours per week), and 20 part-time employees working 24 hours per week, here’s how that looks:
20 x 24 x 4 = 1920 total hours worked per month by your part-timers. 1920/120 = 16 Full-Time Equivalent employees.
So you have 35 actual full time employees, and 16 FTE employees. That puts you at a total of 51 “full time” employees. And you have to provide health insurance.
Just a few other things:
-The individual mandate begins next year! Make sure you’re insured, or Uncle Sam will tax-smack you.
-By 2015, you, the employer, are going to have to report to the federal government the employment status and hours worked for every single employee… every single month. This is, of course, so the government can know whether or not you deserve a penalty.
-Employer’s shouldn’t make the mistake of assuming they can offer a low-value insurance plan and be okay. The government has a formula to determine if the health plan you offer is affordable for your employees. If it’s not, you pay a penalty.
Welcome to Obama’s America.