Pay or Play? Deciding on Employee Health Care Coverage
Pay or Play?
I started my second day listening to the Thursday Keynote’s, Shawn Achor’s, excellent presentation on how concentrating on the positives improves your career success. I ended the day wondering how I was going to apply his principles to dealing with the Patient Protection and Affordable Care Act after attending the government update session with Brad Steele.
Every club, hotel and business in America with over 50 full time employees has a very difficult decision ahead of them. To Pay or to Play? Do we pay the fines and not offer employee health insurance, or do we offer employee health insurance and pay the fines? Yes, there are fines in both of those options, it is not a typo.
First, we need to determine how many FTEs we will have on staff for the year in hopes that we can slide in under the 50 by aggressively monitoring employee schedules. Does anyone remember when 40 hours was considered full time? I do. Unfortunately, the government does not. They have decided that full time is 30 hours for four weeks a month. That pushes a whole new group of employees into my FTE count. Some of these employees are seasonal employees here during the summer months. They work over 30 hours a week so they are now a full time employee.
Next, if we don’t slide in under 50 or are borderline, we do the financials. From a truly financial perspective it is simple. We “Pay” and we never have to deal with in-house health insurance again. We will be charged $2,000 per full time employee. However, we do not have to pay for the first 30 employees. Simple math says that if we have 100 FTEs, our budget for health insurance next year will be $140,000.
However, if we want to keep our competitive edge in employee hiring and retention and decide to “Play” it is a whole new ball game. Offering employee health insurance not only means that we will pay our share of their premiums, it also means that we will pay a $3,000 fine for each employee who does not accept our insurance and purchases it on the exchange. We will have to make sure that the employee’s premium is less than 9.5 percent of W-2 income. So, if we have any employees making minimum wage and only working 120 hours a month, the employee contribution for health insurance cannot exceed $82.65. So, doing the math, if single health insurance coverage costs $400 a month and we have 100 employees, our annual budget for health care will be $380,820.
Trying to get the board of directors to approve spending an extra $240,820 annually on health care may be a little tough. Looks like Washington has set us up to “PAY.”
Jane Schmitz, CHAE is the controller for the Shannopin Country Club in Pittsburgh, Penn. She has a bachelors in Computer Science from Iowa State University. After 17 years as the controller of an architectrual firm, she decided to move into the hospitality industry and accepted the position at Shannopin Country Club in October of 2010. Immediatley she became a member of HFTP and just recently earned her CHAE.
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