Friday, June 7, 2013

PEO Executives Offer Opinions on Obamacare

In a recent survey, top ranking PEO executives offered up their opinions on the Affordable Care Act (Obamacare) and what will be the reaction of employers. The first opinion from PEO leaders on this matter is devised from the fact  that some companies that currently provide insurance are being hit with huge premium increases. Before Obamacare, some clients had been receiving modest increases but now as a result of “community rating”, which is required by the ACA, premium increases have skyrocketed. The result of this could cause some employers to drop health coverage altogether and for others not to offer it. 

Another thought is that some companies will provide coverage but they will have to cut wages to help pay the increased costs.  Some are finding that Obamacare is just “too complex” and these companies will probably have to increase wages and allow their workers to procure coverage through the individual exchanges as some of employees might find better options in the individual exchanges if they qualify for a subsidy. 

The final opinion from the PEO execs is that many companies are revising their business structure to minimize or offset the increasing cost of insurance.  Most companies haven’t made final decisions and some are still trying to find “loopholes” within the regulations. One scenario is to keep workers below the 30-hour weekly threshold requiring insurance.  This means that many employees will lose hours and wages.  Other companies are striving to stay below the 50-employee ceiling that triggers the insurance mandate.  These companies are deliberately restraining expansion and that’s never a good strategy.  All of this clouds the Obamacare promise of universal coverage.  What matters for small and medium-size firms is the analysis between the gap of providing health coverage and the consequences of paying the tax penalties.  The wider that gap becomes in addition to the “hassle factor” of being compliant, the more likely it is that companies won’t be able to provide insurance for their employees.
Source: The Washington Post

It seems clear that PEOs stand to gain plenty of new business as small to mid-sized businesses seek to avoid the additional administrative cost and headaches of dealing with Obamacare.

Don't forget to check out our Obamacare page weekly updates. For more information on how a PEO can address your company’s employee benefit needs, feel free to contact a PEO Representative at the LL Roberts Group (toll free) at 877.8578.6463. 

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