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The Affordable Care Act: Will it put your business in the penalty box?

7.30.12

If you haven’t heard about the Supreme Court’s 5-4 decision to uphold the individual mandate provision of “ObamaCare”, you’ll likely be pleased to know that “Gone with the Wind” won the Oscar for best picture.

Volumes are being written about how this law will affect individuals; yet those of us who depend on the flexibility of contract workers may not have a clear picture of how the PPACA (Patient Protection and Affordable Care Act) might affect our businesses. The degree to which we’ll get pulled into the “Play or Pay” decision hinges on whether our contract workers, if they’re classified as W-2 employees, are deemed full or part-time.

You see, beginning in 2014, employers having more than 50 full-time employees must offer them health coverage or pay a $2,000/employee penalty. Play or Pay. So what constitutes a full-time employee? That’s a key question. The language used in the PPACA states that an employee who works 30 hours or more per week is considered full-time. But what if this employee is part of your variable workforce and doesn’t work for your company every week? Does it still make sense to consider them full-time? In its current form, PPACA’s answer to that question would be “yes.” Those of us running businesses on ever thinning margins might wish to disagree. But there is a proposed solution out there …

Here’s Looking Back At You, Kid:

The American Staffing Association has been lobbying the Feds to add a 12-month “look back” regulation to the law. This would exempt (at least temporarily) employers from paying the penalty until they are able to calculate a 12-month average of hours worked per week for the employee. If it’s under 30, the employee is deemed part-time and no penalty is assessed. (This is a hugely simplified explanation, but I’m sure I’d lose you if I went into any more detail.)  

How about we forget all this complicated look-back averaging, et cetera, et cetera? Let’s just repeal the law! Well, don’t hold your breath on that happening. To repeal PPACA you’d need a Republican president and 60% GOP control of both houses of Congress. You never know, but I think that’s a long shot in the short term.

Instead, let’s focus our attention on regulating this law to ensure it works for the burgeoning contingent workforce upon which our economy now depends.

 

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