Dealers face sticker shock on health plans
ORLANDO -- Auto dealers have 10 months to re-evaluate and change their employee health care benefits under the national Affordable Care Act, and complying with it could leave many of them with sticker shock.
Employers must have their plans in place by Jan. 1, 2014. The penalty for not providing benefits after that will be $2,000 a year per full-time employee for many dealers, says Anita Baker, managing partner for employee benefits plans at CliftonLarsonAllen, an accounting firm whose clients include about 600 dealerships around the country.
Even dealerships that already have robust coverage can expect a 30 to 40 percent rise in health care premiums, she said here today at the National Automobile Dealers Association convention.
The new law is complex, but in some cases dealers could face penalties of $3,000 per full-time employee, depending on how benefits are provided.
"A lot of dealers have been assuming since 2010 that this issue would all go away, and so they haven't made plans yet," says Baker, who is conducting workshops on the subject at the convention. "Even after the Supreme Court affirmed the act last summer, some people waited for the presidential election in November to see if the situation was going to change. Now they're unprepared."
Among the decisions many are now sorting out: Is it cheaper for dealerships to raise their health care benefits or pay federal penalties for not providing enough? Is it cost-advantageous to bump some employees down to part-time status to side-step requirements?
And the biggest question: How much will it all cost?
"We don't know what the new premiums will be," Baker says. States are still drawing up plans for health insurance "exchanges" that will enable employers to find competitive plans.
Baker said that some auto dealers are signaling that there is more to their decision process than dollars and cents.
"This also becomes a competitive issue for a dealership, whether it's a large employer or a small one," she says. "It becomes a factor in how you recruit and retain employees. There might be scenarios where a dealer would come out ahead financially by simply paying the penalties and not providing coverage, but they still want to be able to offer a benefits package that helps them attract employees."
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