Implications of the Affordable Care Act

Implications of the Affordable Care Act

Name:

Institution:

Implications of the Affordable Care Act

Steele Industries

Internal Memo

To:      Marion Steele, President

From: Joshua Cole, Executive Secretary

Date:   08 July 2014

Re:      Implications of the Affordable Care Act on the Operations of Steele Industries, INC

Following the introduction of the Affordable Care Act (ACA) by the Obama administration, the government expects large businesses such as Steele Industries to cover the health insurance costs of any employee who works more than thirty hours a week. To make sure that Steele Industries’ health insurance costs do not become a burden, the company should trim the duration during which part-time employees work, to make sure that none of them accumulate more than thirty hours of work and paid leave or vacation.

Stipulations of the Affordable Care Act

The Obama administration recently introduced the ACA in a bid to improve America’s healthcare sector. The administration expects the ACA act to make it possible for most uninsured Americans to gain access to health insurance policies. This access could come through the employer or through affordable cover provided by other parties. The ACA contains an employer mandate that requires all businesses with more than fifty full-time employees to provide insurance cover for the workers (What is the Affordable Care Act? 2014). Alternatively, companies with fewer than fifty employees can seek better coverage through the Small Business Health Options Program (SHOP). For the small businesses, there is no obligation to provide cover for any employees, though the availability of cheap insurance options through SHOP works as an incentive. The government expects large businesses to provide cover for full-time employees and there are penalties in place if they fail to do so. Companies with more than one hundred full-time workers will have to cover seventy percent of their workforce by 2015 or pay a two thousand dollar fine for every employee after the first thirty (FAQ: How Obamacare affects employers and how they’re responding, 2013).

Impact of the act on Steele Industries

The ACA affects Steel Industries in numerous ways. Firstly, as a firm that hires more than fifty full-time equivalent workers at any specific time, the company is a large business under the stipulations of the act. This means that Steele Industries will have to cover seventy percent of its full-time workers by 2015 or face hefty penalties. However, since the company already provides health insurance cover for its full-time workers, then it has no risk of incurring penalties in the future. Steele Industries considers a sizeable number of its workforce to be part-time; however, these considerations may come into conflict with the ACA’s stipulations. According to the act, part-time workers are those who a company pays for less than thirty work hours per week. This includes breaks and leave days for which the company paid the worker. Accordingly, key problems arise for Steele Industries. Firstly, the company has many part-time workers, some of whom work more than the stipulated thirty hours per week. Secondly, the inclusion of break times for some part-time workers may elevate their status to that of full-time employees. The status of the part-time equivalent employees at Steele Industries will therefore cause many complications for the company.

Recommendations

Steele Industries needs to regulate the work hours of its part-time employees to make sure that they do not fall under the full-time classification the ACA. This means that the company will have to trim the work hours of some of the part-time employees to make sure that they are not more than thirty per week. These reductions should also account for break times and paid leave days. Through these reductions, the company will make sure that the costs of its health insurance do not increase.

References:

FAQ: How Obamacare affects employers and how they’re responding. (2013). Retrieved from http://www.npr.org/2013/10/11/231103865/faq-how-obamacare-affects-employers-and-how-they-re-responding

What is the Affordable Care Act? (2014). Retrieved from http://payroll.intuit.com/support/kb/2001632.html