Editor’s note: This article is one of a weekly series of four articles on the Affordable Care Act.
If we take the position that the Affordable Care Act (ACA) is here to stay, we must then ask ourselves if we have the necessary tools, knowledge, and support to successfully comply with the law and to aggressively manage an evolving cost center. In other words, where do we go from here?
With the introduction of the Affordable Care Act on March 23, 2010, the American health care system as we knew it was changed forever. No matter your excitement for, or aversion to this legislation, most agree that this is one of the largest changes to U.S. health care coverage since the introduction of Medicare in 1965.
In my years of experience in the hospitality industry, I have seen the industry collectively overcome many challenges. OTA’s and big social technology platforms aside, I believe that ACA requirements may be one of the larger management and cost obstacles in our industry. The uniqueness of this industry, the pay scale, the turnover and diverse workforce creates a very unique set of challenges. When it comes to ACA compliance, we must consider:
- The rise in health care costs across the board, a problem that is compounded at the property level with a larger number of employees who will likely opt into your plans, due to the individual mandate, that requires them to have health insurance. Furthermore, the complexity to manage this on a variable basis creates a nearly direct hit to your Net Operating Income.
- Should we pass on these rising costs to our employees? Pay scale aside, the medical costs for typical hospitality employees are rising at 2x the rate of their pay, which does not feel sustainable and certainly does not help with our retention.
- The employee turnover rates in our industry, which are higher than in other industries, lead to nightmares as our accounting and HR teams must provide data to the IRS concerning how many full-time, full time equivalents, and part-time employees under various definitions under the law.
- Employee coverage is deemed unaffordable if it costs more than 9.5% of an employee’s paycheck, leaving the employer to face significant penalties.
- Determining the right hiring mix between full time employees and seasonal/part-time workforces who are currently exempt from benefits to meet minimum coverage rules.
As if this isn’t enough, we also have to determine how communication and language barriers must be overcome to engage your entire staff, so they purchase the required coverage. —Fred W. Malek
Fred Malek is the CEO of Hospitality Benefits LLC, a health care market place exclusively built for the hospitality sector.
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