Obamacare Countdown For Large Employers – Part 1
New Treasury Dept. Rules Punish Employers
Who Push Employees from Full-Time to Part-Time to Avoid Penalties
Large employers may have run out of time to implement certain business strategies to comply with the Affordable Care Act (aka Obamacare), according to the most recent Treasury Department rules.
As an attorney, I began telling my large-employer clients two years ago that if they intended to adjust the number of employees they have working full-time, they should have started it a long time ago, and they should have established a legitimate business purpose for doing so.
My prediction came true, because in the last set of rules from the Treasury Department, it says that if you now try to adjust your workforce size to avoid the employer mandate, the IRS will ignore your attempt and will use your employee count from the previous year to determine your obligations and penalties.
Many large employers who have been sitting on the sidelines waiting to see if the law will be repealed have left hundreds of thousands, and in some cases, millions of dollars on the table.
Follow closely here. The ACA has always had inherent opportunities and strategies for employers to remain profitable. However, each of these opportunities and strategies requires planning and preparation. With the latest round of rules, employers ran out of time to plan in some big ways, and they are now stuck with whatever they have done - or not done.
We all know that Obamacare has been constantly changing by regulation and Executive Order. In some ways, the constant changes have been giving employers a false sense of security, or a belief that they will always get more time to figure it out. Actually, the opposite is true.
As of April 2014, there have been 40 significant changes made to the ACA, according to the Galen Institute. The employer mandate has been delayed twice; once in July 2013 and again in February 2014. Most recently, the penalties for employers with 50-99 full-time and full-time equivalent employees failing to offer coverage was delayed until 2016.
Just a few weeks ago, former White House Press Secretary Robert Gibbs predicted that the employer mandate would likely never take effect. The White House, of course, quickly rebuffed Gibbs’ prediction, but not before a large number of employers took it to heart.
The problem is that every time we think we have a handle on this complicated legislation, it changes. The bigger problem is that when the employer mandate goes into effect (in whatever form it takes), employers will not be able to go back and undo what they are doing now.
There are still a number of other planning opportunities in the law, but they require ‘lead time’ for employers to use them. The less lead time employers have before the law takes effect, the less those opportunities will be available to them.
To assume that the law will continue to be delayed or even repealed is a big gamble to take. Many gamblers I know just lost one round. The smart ones I know are hedging their bets, and getting ready for whatever happens.