Help For Small Businesses Struggling With Obamacare

Entrepreneurs can turn to professional employer organizations to maneuver through complexities of healthcare reform

Professional employer organizations (PEOs) are a possible solution to help small companies maneuver through the Affordable Care Act, also known as Obamacare. With enrollment for health care reform beginning Oct. 1, (shutdown or not) many entrepreneurs are still wondering how to deal with some of the hard to understand new requirements the law will bring.

Anish Rajparia, president of ADP ’s Small Business Services division, ADP TotalSource and ADP Retirement Services in Roseland, New Jersey, estimates that now only about 5% to 10% of U.S. small businesses use a PEO. But he believes that at least 30% to 40% of small businesses should consider the tool as an alternative option to help them deal with the many complexities of Obamacare.

PEOs are firms providing services that allow companies to outsource their management of human resource duties, including employee benefits, payroll, workers’ compensation and unemployment insurance claims and other administrative  tasks. The goal: Relieve the PEO client of those functions so the entrepreneur can focus on running the business and increasing the bottom line.

While many entrepreneurs often handle their own HR issues, some appear to be shifting to PEOs because candidly they don’t want to risk if they are fully complying with the law.

“When Obamacare came along, I think they realized I’m over my head on this one and now it’s time to call in the professionals to make sure I’m doing what I’m supposed to do,” says  Kerry Carruthers, director of marketing and communications at the National Association of Professional Employer Organizations (NAPEO) in Alexandria, Virginia.

Infinity Technology LLC, a McLean, Virginia-based service disabled veteran and black-owned firm that provides information technology, acquisition management and consulting services to federal government agencies, has provided insurance to workers since it started in 2005. It now has 75 employees.

President and CEO Erdley Bent Jr. “Bentley” says it is too soon to tell whether or how (insurance) costs will change as a result of health care reform. However, he says, the Affordable Care Act is just one example of how much human resource management rules are continuously changing and getting more complex.

“TotalSource helps my company stabilize the costs of changing compliance and how we administer benefits, process payroll, manage HR, and track employee hours,” Bent says. He projects company revenue of $13 million for 2013.

Infinity Technology teamed with ADP TotalSource as a PEO partner a few years ago.

“Since then, I have had the peace of mind knowing that whatever laws that were passed that could affect our business, we did not have to worry, because ADP TotalSource took care of compliance for us,” Bent says.

“The latest figures show a growing business. Revenue for the PEO industry totaled $92 billion in 2012, up 14% from  2010, the year health care reform was signed into law,” Carruthers says. She attributes some of that increase to Obamacare from what NAPEO is hearing from small businesses.

Prepared or not, the Obamacare healthcare exchanges open Oct. 1, providing an online marketplace by state for people to shop for health insurance. Americans on average will pay a premium of $328 monthly for a mid-tier health insurance plan, the Obamacare administration reports. (See a list of web sites that provide people more details on what insurance coverage options to consider and check if they are eligible to get a subsidy or tax credit to help offset or pay for the cost).

One of the nation’s largest PEO providers, ADP TotalSource makes available health benefits to employees of about 6,900 small and mid-size businesses.

“We can offer them guidance on what mandated benefits to offer, and help them remain competitive and compliant by integrating payroll, workforce optimization, and time and labor management with benefits,” Rajparia says.

Alan Reid, president and CEO of EMPO Partners, a black-owned Minneapolis-based PEO and human resource outsourcing firm, says PEOs are able to aggregate their small business clients’ purchasing power to access affordable health care and employee benefit programs that typically are only afforded  to much larger companies.

“This in turn provides the clients of PEOs a competitive advantage to attract and retain top talent to grow their businesses,” says Reid, also a board member of NAPEO.

Dave Imbrogno, senior vice president of service and operations at ADP Totalsource, says the cost of a PEO for a business could depend on many factors. Some of those factors include the size of the business, what state it operates in and its employees’ job duties and functions.

Here are tips from ADP TotalSource and Black Enterprise research to help individuals and businesses embrace Obamacare:

1. Evaluate the law’s potential impact on your business, including its legal, tax, compliance and financial requirements.

2. Communicate to employees the evolving benefits landscape, including enrollment options and new requirements they will need to comply with (e.g., individual mandate) under the law.

3. Implement single sourced, integrated solutions that manage employee eligibility, enrollment, and education and help employers optimize compliance and decisions on benefits strategies.

4. Some web sites to visit with more details on health care reform are: www.sba.gov, www.prevention.com/aca-centerwww.healthcare.gov, www.adp.com/health-care-reform and www.business.usa.gov/healthcare

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