Small Employers and Benefits: Why Bother?
As a small business owner, the idea of offering benefits can often seem daunting. And to be honest, I get it. For some, the cost alone is prohibitive, while others struggle with administering the benefits, managing eligibility, and understanding the complicating compliance aspects that offering a benefits program entails. Why would any business owner add to their already exhaustive list of responsibilities if the law doesn't require it?
If someone is accustomed to seeing a refund but never complied with the individual mandate, they were more than just a little disgruntled at their return this past April. As an employer, you have the power to solve this problem.
If you are a small business owner with less than fifty full-time-employees (or equivalents!), you are not required by law to offer benefits to your employees as of 2016. However, building your business requires retention of the right people to keep moving your organization's goals forward. Morale and productivity are at stake, and keeping employees happy and healthy should be a priority! Furthermore, ACA compliance has a few more implications than you may think. So why bother?
Employee Loyalty. As employers, we would like to think that our people are loyal; that if they come into work every day, and continue to do their job, they must be satisfied with their role and surely aren’t seeking other work. Right? Well, not exactly. According to research by Career Builder, published earlier this year, 3 out of 4 people currently employed are actively searching for a new position. It’s safe to say that feelings of loyalty to one’s employer are not only sparser, but more valuable than ever—and offering a benefit plan with the right mix of options can increase employee loyalty by up to two-thirds, according to this MetLife Employee Benefit Trends Study.
Speaking of loyalty, even though you as a small business may not be exposed to the Employer Mandate, the Individual Mandate still exists. This requires that most individuals are required to carry health insurance or pay a penalty at tax time-- and boy, don't mess with people's tax returns. Really. If someone is accustomed to seeing a refund but never complied with the individual mandate, they were more than just a little disgruntled at their return this past April. As an employer, you have the power to solve this problem. Offering Minimum Essential Coverage (100% preventive care at no-cost share in-network) to your employees gives them the opportunity to meet the individual mandate's requirements, and costs far less than traditional major medical coverage. Offering that in tandem with a handful of employee-paid voluntary benefits is a great way to dip your toe in the pool as a small employer, with less expense than you may expect. Think of how it would make your employees feel to know their employer is looking out for them even though they aren't required to by law--talk about loyalty!
Or, maybe you are exposed to the Employer Mandate and you don't realize it yet. This is a common challenge faced by employers who have multiple locations, lots of part-time workers, or perhaps a fairly transient workforce. The individual mandate requires that employers with fifty or more full-time EQUIVALENTS comply or face penalty. Far too often, I hear people make the mistake of replacing EQUIVALENTS with EMPLOYEES, which may have you thinking that keeping 48 full- timers on the pay roll while ignoring the part-timers is a strategy for compliance. For the purposes of ACA, any employee who works 30 hours or more per week is a full-time equivalent, while two part-timers who each work 15 hours per week will count together as another full-time equivalent. So for example, an employer with 25 full-time-employees working 30 hours a week, and 75 part-timers working 15 hours per week, that employer now has 62.5 FT EQUIVALENTS, and is exposed to the employer mandate. If it sounds confusing, well, it is... but there is an abundance of great technology out there that can help you keep track of your ACA status. Chances are, if you're using a payroll company now, you may already have access to said technology already. If you are doing payroll in-house, and you have concerns about your relativity to the 50 FTE threshold, maybe it is time to consider a payroll provider to keep you in the loop. This is not one of those pesky compliance issues to sweep under the rug and ignore; penalties are expensive and are only going up.
Originally published on LinkedIn on August 8th, 2016
