Pick Your Community: | Hopkins | Muhlenberg | Daviess | Christian | Henderson | Lakes | McCracken | Webster

What's the Employer's Plan for ACA?

indexKENTUCKY (1/27/14) – The Affordable Care Act is causing employers to consider a number of strategies so as to be in compliance.

Larger employers provide health insurance for employees and some include families.

The employee usually has to contribute to the cost of the plan plus pay their co-pay and deductible.

Co-pays tend to range from $10 to $30 for each office visit. 

The deductible of an insurance policy is what the patient must spend before insurance kicks in.

Deductibles have risen in recent years as health insurance plan costs have escalated.

Employers have used a health insurance benefit to attract more skilled and dedicated employees.

The 40 hour work week equals 173.33 hours per month.  A health care plan that costs $300 per month equals a $1.73 per hour benefit.

This would add almost 22 percent to the hourly wage of a person making $8 per hour.

This 22 percent is in addition to other employer costs for workers compensation insurance, matching Social Security and Medicare, and unemployment insurance (both state and federal).  Vacation and holiday benefits can add another 2 percent to 6 percent to employee costs.

The lower the pay of the employee, the greater the percentage cost impact to the employer.

Typically the lower paid employees have less education, fewer skills and less experience. These employees do not often enjoy many benefits especially health insurance.

Now with the ACA, employers are exploring their options.

The employers we spoke with did so with the understanding that they were off the record. 

The options seemed to fall out into five categories.

  1. Provide the Insurance – Most businesses are expected to provide employee health insurance coverage and charge the employee (up to 9.5% of employee’s pay) to help pay the premium cost.  One employer thought that his lower paid employees would decline coverage and go to the exchange.  This would be particularly true if the employee qualified for a subsidy.
  2. Outsourcing Labor - One business with slightly over 50 employees was looking at ways to get their head count below 50.  “I am even looking at offering one group of employees the option of being an independent subcontractor.  I will do that if I cannot afford the insurance package.”  
  3. Go to Part Time Schedule - Another business with well over 50 employees will change their work schedule.  A supervisor told SurfKY News, “We plan to change our manufacturing to 60 hours per week.  As long as we keep an individual’s hours below 30 hours per week, we will not have to provide insurance.  If we work 6 - tens, shift A will work 7 to 5 Monday through Wednesday and Shift B will work 7 to 5 Thursday through Saturday.  When you take 30 minutes off for lunch, that keeps everyone at 28.5 hours per week.”  Another manager said that he may do the same thing “I wouldn’t be surprised to see a lot of companies doing this.  If you have several companies working this schedule, you will get into an ad-hoc employee sharing especially in food service and retail.”
  4. Outsource Labor Overseas - A plant manager of a large multi-national company said that his company can reallocate production between several manufacturing facilities around the world.  “If our costs get too great in one location, we can shift production to another location.  Management is keeping close tabs on labor costs and our investments follow reliable, qualified, low-cost labor.”  He said.  “I don’t think we know what our health insurance cost will be at this facility.  Talks of a higher minimum wage are a big concern to me.  We pay well above minimum (wage); but, we have to stay well above minimum to keep our people happy.  I think we would lose at least one production line if minimum is increased.”  
  5. Automation - Another option being considered by several companies is to automate the repetitious, mundane jobs.  One small business owner told SurfKY News “I have 45 employees and I pay half their health insurance.  My oldest employee is 51 years old and he is one of a handful that takes the insurance.  I think my business will pick up in 2014.  I can upgrade to higher capacity machines and I can automate several functions.  Taking these steps, I can do quite a bit more business and keep my headcount under 50.”  
Companies are taking a “wait and see” approach on the Affordable Care Act. Once they have a clear vision of their options, they will be ready to take the steps necessary to survive.

Ron Sanders
SurfKY News

© Copyright 2014 SurfKY News Group, Inc. All rights reserved. This material may not be published, broadcast, or rewritten without permission. SurfKY News encourages you to share this story by using one of the social media links below.

button coupons
button classifieds

Most Read This Week

December 19, 2014 5783

Armstrong Mine to Layoff 39 by End of Day

in Top News For All Sites by Rita Dukes Smith, SurfKY News Director
December 19, 2014 5084

Dawson Springs Man Charged with Sexual Abuse of…

in Local (Hopkins) Top News by Detective Sean McCance
December 19, 2014 4624

Woman Flown to St. Mary's after Two-Car Collision

in Local (Hopkins) Top News by Trooper Stu Recke
December 18, 2014 4515

Cat Scratching over Dog Ownership Escalates

in Local (Hopkins) Top News by Amber Averitt, SurfKY News
December 19, 2014 3868

Vehicle Fire Causes Traffic Back-Up on Pennyrile

in Local (Hopkins) Top News by Doreen Dennis
December 19, 2014 3580

Vehicle Explodes into Flames on Pride Avenue

in Local (Hopkins) Top News by Gwen Smith
December 23, 2014 3495

Couple's Alleged Dispute over Blanket Leads to…

in Local (Hopkins) Top News by Madisonville Police Department
December 23, 2014 3031

Alleged Theft at Walmart Sends Two to Jail

in Local (Hopkins) Top News by Madisonville Police Department
December 22, 2014 2819

Madisonville Police Arrest Reports - Dec. 22, 2014

in Hopkins News by Madisonville Police Department
December 20, 2014 2746

KET’s Kentucky Life Segment to Feature Old…

in Local (Muhlenberg) Top News by Paul McRee, SurfKY News

Stories Trending Today

December 23, 2014 3495

Couple's Alleged Dispute over Blanket Leads to…

in Local (Hopkins) Top News by Madisonville Police Department
December 23, 2014 3031

Alleged Theft at Walmart Sends Two to Jail

in Local (Hopkins) Top News by Madisonville Police Department
December 23, 2014 2368

Disturbance Results in Vehicle, Foot Pursuit,…

in Local (Hopkins) Top News by Officer Tyler Russell
December 23, 2014 2015

Hopkins County Grand Jury Indictments

in Local (Hopkins) Top News by Karen McKnight
December 23, 2014 1823

Madisonville Police Arrest Reports - Dec. 23, 2014

in General News For All Sites by Madisonville Police Department
December 22, 2014 1604

Construction Projects Suspended to Ease Holiday…

in Top News For All Sites by Lisa Tolliver
December 23, 2014 1443

UPDATE - KSP Issues 'Golden Alert' for Missing…

in General News For All Sites by Trooper Corey King
December 23, 2014 1398

'Santa Land Diaries' a Huge Hit at Palace

in Local (Muhlenberg) Top News by Paul McRee, SurfKY News
December 23, 2014 1299

Mustangs Drop Tournament Opener to Calloway County

in Local (Muhlenberg) Top News by Steve LeMaster
December 23, 2014 1121

Strategies for Last-Minute Shoppers

in General News For All Sites by SurfKY News

SurfKY News Group, Inc.
Corporate Office & Studio
1125 Nebo Rd.  •  Madisonville, KY 42431
270.452.2727 (phone)
  •  270.452.2249 (fax)


Contact a member of our staff: www.surfky.com/contact
Copyright © 2014 SurfKY News Group, Inc.  •  Terms of Use  •  Site Map

social fbsocial twsocial yt
social gpsocial flrsocial rss