Tips for Employee Health Plan Budgeting

John Krautzel
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The employer mandate that requires companies to provide employee health insurance has been delayed until Jan. 1, 2015; however, it's not too early to begin talking to your clients about budget revisions needed to help cover the additional costs. Most of your clients will welcome any accounting tips that will save money, but the Affordable Care Act (ACA) may be a touchy subject for some people. Approach the topic carefully, and try to find accounting tips for your clients that work well for their businesses and employees.

The ACA, also known as Obamacare, was designed with the intention of making it easy for all US citizens to obtain health insurance. Under the new law, companies with fifty or more full-time-equivalent employees have to offer affordable employee health insurance to full-time employees and dependents under the age of twenty-six. The employee health insurance offered also has to meet specific requirements—the company is required to cover any portion of the premium that exceeds 9.5 percent of the employee's pay, and the insurance must cover at least 60 percent of the total value of medical services provided. For many companies, especially restaurants and retail stores, the insurance premiums are an added expense. So, to cover the additional expenditure, you need to analyze your clients' budgets to cut costs in different areas.

When you're reviewing accounting options with your clients, keep in mind that the ACA doesn't require companies to offer employee health insurance to anyone who works fewer than thirty hours per week. Many retailers, such as Walmart, Target, and Forever 21, have been cutting employee hours so that workers are classified as part time and then discontinuing employee health insurance for these individuals. While this may sound harsh, it's actually a good option for employers and has benefits for their employees as well. According to Jodee Kozlak, the head of Target's HR department, less than 10 percent of Target employees were enrolled in the part-time employee health insurance plan, and by offering these part-time employees insurance, the company was negatively impacting the ability of these workers to obtain government subsidies. This is why it's important to review a company's budget from all angles. Your clients won't want to take anything away from their employees, but you need to ensure that what they are offering is helping—not hindering.

Fortunately, you won't have to deliver bad news to all of your clients. According to KnoxNews.com, some employers that have fewer than twenty-five employees are eligible for tax deductions if they offer employee health insurance. To qualify for the tax deductions, the company must pay at least 50 percent of the premium for all employees and have average wages of less than $50,000 annually.

Anytime you have to tell a client that he or she has to cut expenses is unpleasant. However, it's possible to turn the added expense of employee health insurance into a positive situation by cutting expenses that truly aren't necessary.

 

(Photo courtesy of freedigitalphotos.net)

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