Mid-Sized Businesses Face Challenges with the Affordable Care Act

Mid-Sized Businesses Face Challenges with the Affordable Care Act



The Affordable Care Act is causing business owners to face a lot of challenges which can affect their bottom line. The new law, also known as Obamacare or Health Care Reform is requiring changes that are actually very difficult for companies as well as costly. With the high cost involved in implementing the changes, their business goals might not be met.

Many Companies Are Not Aware

According to a survey that ADP research has recently finished, most companies have reported difficulty with the fundamental healthcare altering changes. The awareness is surprisingly low, according to the report. Very few companies know how to handle the requirements that the Health Care Reform act disclose. For example, the decision makers of key benefits are not aware of the requirement to let their employees know of any aspect of insurance exchange.

Few Companies Understand the Law

The total of benefits decision makers and human resources that are confident in their understanding of their responsibilities is 17%. The rest of the businesses and decision makers don’t have full understanding of the law. As a result, they are faced with a lot of potential issues.

Many Businesses Didn’t Comply

The lack of understanding has caused many professionals to not even honor the new law. The survey reveals that the Supreme Court was not expected to enforce the complete law. As a result, they did not comply.


The Tough Situation

The Tough Situation

This puts a lot of mid-sized business owners in a tough situation. One factor in this is that they are expected to behave like smaller business while obeying regulations for larger businesses. This really brings a lot of difficulty to the businesses.

What Qualifies as a Large Business?

According to certain parts of the reform law, a company is a large company if it has more than 50 employees. However, federal standards would qualify them as small businesses. As a result, they are no longer allowed to shop for small-business tax credits. They also are not eligible for new employer insurance marketplaces or small-business exemptions to health coverage rules.

The Actual Cost

To add to a lack of understanding of compliance to the new law, there is a lot of costs involved in implementing the changes in the company. The ADP survey states that 82% of mid-sized companies consider cost to be a barrier to achieving business goals while supplying health insurance. This intimidates the mid-sized business owners.

Looking for New Options

Employers are also going to have to look for new options because of the insurance overhaul. Among the things being considered is the high cost “Cadillac” plans. The ADP states that these types of plans carry an excise tax of 40%. Employers will likely have to deal with these costs as well.


Other elements

The Other Element of Affordable Care

The health insurance provider tax is another element of the ACA. The federal government charges insurance companies according to how many people are covered. This cost is then passed on to the employers which might even pass on to the employees.

The Trickle Down Effect

Clare Krusing, who speaks for America’s Health Insurance Plans, calls this a trickle-down sales tax. This is because it makes consumers pay more for a service. This tax is resulting in higher priced insurance premiums.

Executives Expanding

Executives still don’t know a lot about the costs of Affordable Care Act. The lack of knowledge has rendered strategic decision making of business leaders impossible. A lot of executives are trying to expand their business with investments in technology and other assets with recoveries from a difficult economy.

Future Investments

Deloitte has a released a report on March 2014 that show new products and services as well as employment and training to be great areas of investment. Over 1/3 of the companies are trying to either upgrade their technology or pay for new equipment.


Legal Expenses

Legal Expenses

The National Federation of Independent Business states that the law will make business growth for small businesses very costly. One example of this is a restaurant that gains a 50th employee will be faced with a penalty for $40,000 without healthcare coverage.

Some Businesses Cut Corners

Some businesses try to handle this by firing employees. They can also put part timers in place of full timers. A lot of business also outsource their tasks.

Opposition to the Law

There are people that believe that the new law should be at least revised. One person named Jost believes that the law should be replaced with something more effective in order to make it easier on the employers. Robert Gibbs, along with many employers, believes that this will be one of the first things to go. However, time will tell how things pan out for the Affordable Care Act.


Article provided by NECHES FCU, an Equal Employment Opportunity Employer.
Neches FCU is a well-known and trusted Texas Credit Union with an awesome team of professionals ready to provide services to our members.
When their doors open at any of the nine service outlets, our goal of “Ultimate Member Satisfaction” becomes the sole focus for every staff member.
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