Businesses with 50 to 299 employees are enhancing retirement contributions,
The ACA requires businesses with at least 100 full-time employees to offer health insurance, and in 2016, companies with 50 or more employees must do the same. But, the online survey of 334 U.S. small business owners conducted on the Institute’s behalf by Harris Poll revealed that:
- Sixty-seven percent believe the ACA will make it more difficult to offer competitive medical benefits.
- Sixty-four percent say their employees already consider their health benefits less attractive.
“A company’s health benefits package once proved to be a deciding factor in where employees chose to work. With health care now available on the open market, it’s harder for employers to separate from the pack,” explains
Already, many small businesses are doing just that, the survey shows:
- Forty-four percent say a greater need exists now to offer employee benefits than before the ACA was adopted.
- Forty-three percent say they’ve already increased their contribution to retirement plans as a result of the ACA.
Major changes
As the ACA continues to roll out, small business owners – especially those with more than 50 employees – are increasingly likely to turn to financial advisors for guidance. Forty-four percent of them think the ACA will be difficult to navigate and 34 percent say they’re not prepared to handle all of the changes required for ACA compliance.
Eighty-four percent of small businesses with at least 50 employees reported that they already have made health care plan changes as a result of the ACA. Among other findings:
- More than three quarters (77 percent) expect to make additional changes within the next two years.
- Four in five that use or plan to use exchanges report having to drop several benefits in order to use private health insurance exchanges.
- Sixty-two percent say they have or will need to drop some type of health benefit.
- Twenty-seven percent say they have or will need to drop retirement benefits.
- Thirty-percent say they have or will need to drop life insurance.
The ACA also is changing the mix of employees at small businesses with 50 to 99 employees. Nearly one-fourth (24 percent) say they plan to replace full-time employees with part-timers and 16 percent intend to pare their workforce over the next two years because of the ACA.
“Our survey finds that many small business owners are trying to avoid the expense of offering their employees health insurance by reducing their hours to part-time or laying them off,” said Carter. “Many already have done this and more tell us they plan to do so within the next two years.”
End of Job Lock
The ACA also is likely to impact significantly how Americans approach their retirement years. Health care costs represent one of the biggest expenses individuals face in retirement. While some data points to small businesses reducing hours or employees, the ACA in some cases creates opportunities for people to retire on their terms – or open their own business. The ACA guarantees employees cannot be denied coverage for preexisting conditions and it can help cover the cost of insurance premiums. Therefore, people may not have to work just to keep their employer-sponsored health insurance until they become eligible for
“Employees are becoming more mobile as a result of the ACA and employers’ decisions on health insurance,” Carter said. “Because of this, an employer-sponsored retirement plan becomes a crucial benefit for retaining and attracting employees – employers also value this option as their contributions are tax deductible.”
Advisors needed
Reflecting the lack of preparedness many small business owners express, nearly four in five (77 percent) of those with 50 to 299 employees believe retaining an advisor familiar with the ACA would benefit their company and 72 percent would like to talk personally talk to an advisor about the impact of the ACA on their company.
“Business owners have a lot of questions regarding the Affordable Care Act. It’s important for financial advisors to explain it fully to them,” said
Financial advisors can visit http://www.nationwidefinancial.com/ACASmallBusiness to learn more.
Methodology
This survey was conducted online within
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