Solving the Obamacare “Problem”
There is hope!
After years of an economy that bankrupted businesses and stole jobs from hard-working Americans, our country seems to be turning a corner. Business and franchise owners are at the heart of this turnaround, putting people back to work, stimulating the economy and providing valuable products and services.
You would think you should be encouraged to keep growing, to continue hiring, to do what you do best. Healthy growth of business is our country’s best possible stimulus package, and you’re the one staying up nights worried about making payroll, giving people an opportunity to earn a wage and take care of their families.
Unfortunately, doing business in the U.S. has never been harder. Instead of focusing on your company, you’re wasting time navigating government regulations like taxes, complex reporting forms, wages, zoning and countless others. All of these regulations have stymied the growth of businesses across all sectors – and that’s no good for the economy or for you.
The latest rule relates to healthcare. Obamacare has put a huge burden on employers nationwide, and meanwhile insurance costs have continued to skyrocket. The new healthcare law threatens the bottom line in a very real way. Many businesses simply can’t cough up the money insurers are demanding.
The issue is especially complicated for franchise businesses, which often employ support-level and seasonal workers who can’t afford traditional health insurance. The issue becomes even more problematic for franchise owners who want to grow, because purchasing another unit often means inheriting more employees. By law, you’re now obligated to offer health benefits – a staggering expense. It all adds up to a huge problem, throwing a wrench in running and growing a franchise.
As founders of several businesses including Redirect Health, my partner, Dr. David Berg, and I know this pain. But did you know there’s a smart and simple strategy that could unlock your growth and address the Obamacare problem? You’ve probably been told you must provide costly traditional health insurance in order to comply with the law, but this simply isn’t true.
Here’s what Obamacare does require:
- IRS Forms 1094 and 1095: All employers must file Forms 1094 and 1095 at tax time with details on each employee’s health coverage. Failing to do so results in a fine of up to $2,400 per year, per employee, with a maximum of $3 million.
- Minimum Essential Coverage (MEC): Companies with 50 or more full-time-equivalent (FTE) employees must provide MEC. For businesses that self-insure, MEC includes 71 specific services – screenings, limited primary care, preventive services, some medications and COBRA.
If you don’t offer at least MEC, you will be penalized $2,000 per employee (excluding the first 30 employees).
- Minimum Value Plan (MVP): MVP is difficult to define, but in short, it states the plan you offer your employees must cover at least 60 percent of their health bills after monthly premiums. Companies with 50 or more FTE employees that don’t offer an MVP face a $3,000 fine for each employee who receives a subsidy on the healthcare exchange.
Fines for noncompliance are enough to put many companies out of business, but there’s a smart, strategic solution you need to know about: it’s called self-insurance.
Large companies have been self-insuring for a long time, but it’s a newer trend with smaller companies. Self-insurance can help all businesses meet Obamacare mandates for considerably less money than traditional insurance, but there’s a specific strategy designed for franchisees with lower-wage and seasonal employees. A broker who specializes in self-insurance for small businesses can build a plan that is smart, inexpensive and provides employees with high-quality healthcare. To implement such a plan:
1. Offer the care most employees need: This healthcare goes beyond MEC and includes the routine services most people use, most of the time – primary care and injury care, rehabilitation (including chiropractic), labs, immunizations, generic medications and preventive services.
2. Purchase stop-loss insurance: This will cover the most expensive healthcare – hospitalization and specialist care – and will ensure you meet MVP requirements.
3. Stop overpaying: Hire an organization to manage the care delivery and logistics process, and eliminate the waste, administration and overpricing rampant in health insurance.
Healthcare doesn’t have to be a hindrance for your business. Traditional insurance premiums will probably continue their uptick, but self-insurance transforms healthcare from a business issue to a competitive advantage and recruiting tool. Most importantly, a well-designed self-insurance plan will allow you to focus on what you do best: running your company, putting good people to work, and taking care of those people.
To learn more about Obamacare requirements and how you can turn your company’s healthcare plan into a competitive advantage, watch this video at redirecthealth.com/zerocostobamacare.
Paul Johnson is CEO of Redirect Health, which helps employers and their brokers build affordable, ACA-compliant healthcare plans using a self-insurance model.