Small business owners and rising insurance costs.

[Sarc]

Two and half years ago, a few colleagues and myself started a retail/hospitality design firm. Fortunately for us, business has been extremely good since we've opened our doors, affording us the opportunity to bring on 6 employees.
We just received our new rates for 2015 from our benefits provider and the new rules which will be enforced at the turn of the year.

In the past we were charged one rate per family, this will be changing effective January 2015

We will now be charged a rate per family member by their age - therefore, instead of charging a bulk family rate, we will be charges a cost per person within the family, which you can imagine will considerably impact our monthly rate and becoming cost prohibitive quickly.
We are also going to have to pay a $750/month medicare supplemental benefit rate.
Aside from shopping for other providers, the suggestion has come up to either a) use our spouse's coverage if possible or b) an option is that we no longer carry the spouse and children on our coverage to cut our costs. Not crazy about either option frankly, I would prefer to increase our fees but that's another topic for another day.

How are you all handling this increase in costs under the new healthcare laws?

[wdfifteen]

We are passing the increased costs on to our employees. I've never liked the employer supplied health insurance model and I'm looking at the health insurance laws as a way to back out of it.

[ShakinJoe]

I have been forced to have everyone as a 1099.

[mikester]

My company is very large - we have a mandate that if your spouse's company provides benefits then they should use that instead of yours.

Not fantastic but not unreasonable either.

My wife is a stay at home mom so I don't have to worry about it at the moment.

[modernbeat]

The small manufacturing and fabrication company I work for decided well before the current insurance nonsense to pay the employees more, and offer fewer, or no benefits. So far it's worked out. If you want insurance, you buy it. If you don't, you keep your pay, well...except what Uncle Sam gets.

[Porsche-O-Phile]

Originally Posted by ShakinJoe

I have been forced to have everyone as a 1099.

This is what you have to do now. Too damn expensive to bring people on as W-2.

[LWJ]

To the OP.

I sell this stuff. It sucks, as you generally are settling on a solution that is leaks offensive / somewhat acceptable for the $$.

I don't understand the Medicare piece. We don't do this in Oregon. Perhaps it is mandated in your State?

Also, check out MEWA's. These are groups of similar businesses banded together for mutually reducing rates. You obtain large group rates for small groups. They can also by pass some of the ACA mandates for a while - keeping costs where they were - at least temporarily.

Good luck. It is challenging.
Larry

[stomachmonkey]

Originally Posted by ShakinJoe

I have been forced to have everyone as a 1099.

Originally Posted by Porsche-O-Phile

This is what you have to do now. Too damn expensive to bring people on as W-2.

You have to be careful there.

Make sure your 1099 employee really is one as far as the IRS is concerned.

They frown upon this tactic and will pick it up on a payroll audit.

Do you supply all the tools / resources needed for them to perform their function.

Do you / did you train them for their role.

Do they set their own hours.

Do they invoice you or are they paid from payroll.

Do they work for other companies.

[dtw]

Originally Posted by stomachmonkey

You have to be careful there.

Make sure your 1099 employee really is one as far as the IRS is concerned.

They frown upon this tactic and will pick it up on a payroll audit.

Do you supply all the tools / resources needed for them to perform their function.

Do you / did you train them for their role.

Do they set their own hours.

Do they invoice you or are they paid from payroll.

Do they work for other companies.

This. Another couple questions they look at:

Who supervises their work and reviews their performance?

If the person were injured on the job, whose insurance would be kick in?

[wdfifteen]

Originally Posted by ShakinJoe

I have been forced to have everyone as a 1099.

How do you get away with that?

[Mike80911]

I admire you for wanting to provide your employees with benefits. But with only 6 employees you are not required to provide benefits. Maybe as stated before just give each one a little more money and drop the insurance all together. If the government truly cared about the working class they would drop all of the ridiculous expenses associated with paying employees and allow the employer to pass on the savings to the workers in the form of higher pay.

[stomachmonkey]

Originally Posted by wdfifteen

How do you get away with that?

No offense Patrick but given your recent HR issues I do not recommend you even remotely entertaining this.

[Sarc]

Originally Posted by Mike80911

I admire you for wanting to provide your employees with benefits. But with only 6 employees you are not required to provide benefits. Maybe as stated before just give each one a little more money and drop the insurance all together. If the government truly cared about the working class they would drop all of the ridiculous expenses associated with paying employees and allow the employer to pass on the savings to the workers in the form of higher pay.

Thanks for all the comments. As you can imagine, finding the right talent in our area for what we do is challenging, and we find ourselves providing the benefits to both retain the talent we have as well as to make it enticing for future employees who might not give us a second glance, preferring to go with one of the more established local firms.

Larry, will certainly look into MEWA's. This might be a good solution for us.

[Mike80911]

A good friend of mine was working as 1099 doing executive protection but only for one person. The IRS came in and questioned the 1099 status now the employer is on the hook for all sorts of back taxes and penalties. Best not to mess around with that stuff always ends up bad for the employer in the end.
I understand your wanting to keep the talented and best but maybe you can drop the insurance have them apply for Obamacare and then pick up the tab for that in the form of a raise.

[widebody911]

Originally Posted by Mike80911

employer to pass on the savings to the workers in the form of higher pay.

Hahah! Best laugh I've had all week!

[dtw]

Quote de Mike80911

employer to pass on the savings to the workers in the form of higher pay.

Hahah! Best laugh I've had all week!

No, really. A pretty common strategy these days.

[wdfifteen]

Originally Posted by stomachmonkey

No offense Patrick but given your recent HR issues I do not recommend you even remotely entertaining this.

It was a rhetorical question.

[74-911]

Originally Posted by stomachmonkey

You have to be careful there.

Make sure your 1099 employee really is one as far as the IRS is concerned.

They frown upon this tactic and will pick it up on a payroll audit.

Do you supply all the tools / resources needed for them to perform their function.

Do you / did you train them for their role.

Do they set their own hours.

Do they invoice you or are they paid from payroll.

Do they work for other companies.

Absolutely. The IRS ultimately determines if an employee is actually 1099 and if they say no, you are on the hook big-time. It isn't just a matter of you declaring they are independent contractors. From some articles I have read recently, there is a lot of this going on and the IRS is aware of it.

[stomachmonkey]

Originally Posted by wdfifteen

It was a rhetorical question.

LOL, just lookin out for you my friend

[Mike80911]

Originally Posted by widebody911

Hahah! Best laugh I've had all week!

Glad I could make you laugh It is always nice to make others enjoy their day.