How are the Affordable Care Act mandates affecting your firm’s employment structure? The Answer may
- Tree of Knowledge Research
- Mar 7, 2014
- 3 min read
Under the new Patient Protection and Affordable Care Act enacted by Congress in 2010, employers will be responsible for providing their full-time employees with an employer-sponsored health plan. Otherwise, they face a financial penalty, which is legislatively called “the Shared Responsibility Payment.”[1] According to the bill, employers who carry full-time employees on their payrolls will be responsible for providing “acceptable coverage” under an employer-sponsored plan and are required to pay at least 72.5 percent of the premiums of such plan.[2] In addition, an employer’s contribution for plans providing family coverage amounts to 62.5 percent.[3] These percentages vary depending on how many full-time employees the employer has.[4]
While it is a focus of law firms to keep up to date with changes in the law and how these laws affect their business, other groups of small businesses have struggled to find clarification on the new healthcare law and an understanding of how this law will affect their business. The National Federation of Independent Business (NFIB) recently wrote and published a letter sent to the IRS detailing the concerns of its members regarding the implementation of the law.[5] The letter describes, in part, confusion on the side of the NFIB due to their absence from the final commentary on the regulations published in the Federal Register on February 12, 2014 entitled “Shared Responsibility for Employers Regarding Health Coverage.”[6]
The Henry J Kaiser Family Foundation conducted a survey entitled “2013 Employer Health Benefits Survey” and published it on August 20, 2013.[7] Its findings noted a six percent annual increase in premiums for single coverage and a corresponding four percent increase for family coverage.[8] Additionally, it found that 58 percent of covered workers at firms of 3-199 employees required a deductible of $1000 or more. According to the survey, the average annual premiums for employer-sponsored health plans were $5,884 for single coverage and $16,351.[9] Also, the survey noted an 80 percent increase in family coverage over the last 10 years.[10]
What does this mean for cash strapped law firms on tightening budgets? The new healthcare will increase the cost of labor, thereby cutting into a firm’s net income and profits.[11] An obvious solution for law firms to compensate for this new expense could be to become more efficient in the work place. In the business world, this means maximizing the value of a dollar spent to generate revenue. Traditionally, firms shed expenses in the form of unneeded staff, unprofitable products or production processes, or reorganizing internally. For law firms, this could mean cutting the hours of office staff such as paralegals and new associates, or discontinuing their services all together. It could mean maximizing the efficiencies provided by office technology, specifically in legal research, document editing and publishing, and correspondence. A potentially overlooked additional levy the new law is costing law firms is simply the expense of researching and ensuring compliance with the new law. The IRS provides guidelines on its website, but law firms know they need to go a few steps further and consult with industry professionals such as accountants, health insurances specialists, and other lawyers who specialize in this area in order to ensure compliance.
Here, at the Tree of Knowledge Research, we are positioning ourselves to assist lawyers and law firms in maximizing the efficiency of every dollar spent on their cases because we realize the importance of cost-effective business practices in today's enviornment of expanding regulations and steadily increasing health care costs. Our expertise enhance the quality of services provided to the client, and we save attorneys time and money while doing it.
[1] Sec. 1513 of H.R. 3962; also known as the Patient Protection and Affordable Care Act…http://housedocs.house.gov/rules/health/111_ahcaa.pdf
[2] Id.
[3] Id.
[4] “Affordable Care Act Tax Provisions For Employers” published on the IRS website…http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions-for-Employers.
[5] Letter sent to the Honorable John Koskinen, Commissioner of the IRS…http://www.nfib.com/assets/Employer_Mandate_NFIB_SBLC_Letter-to_IRS_030514.pdf
[6] Id.
[7] “2013 Employer Health Survey” by The Henry J. Kaiser Foundation….http://kff.org/report-section/2013-summary-of-findings/
[8] Id.
[9] Id.
[10] Id.
[11] Economics article titled “Obamacare is a Devastating Tax on the Working Class”…http://mises.org/daily/3855/
