The Affordable Care Act:
Calculating the True Costs of Obamacare

Have You Calculated All The Costs?

Are you worried about the costs of complying with the Affordable Care Act? Let us show you how you could save money and morale.

"Pay or play" calculators have become widely available in the months leading up to the new penalties imposed by the Affordable Care Act (commonly referred to as the ACA or Obamacare) in January of 2016 (read more about what the ACA means for your business in 2016).

For some large companies, the cost of insuring employees seems astronomically high compared with the fee required for non-compliance with the ACA (an average of $4,400 in employer-paid premiums versus $2,000 per employee in fees).

But what about the costs that aren't quite as immediate as a non-compliance fee or an insurance premium? What if you could save money and improve morale? Considering the costs from all angles and striving for win-win situations can help companies make the best decision when it comes to a mandate that's a hot-button issue for employees and employers alike.

Calculating the True Costs

The Cost of Morale

Morale can't be measured in dollars, but it should clearly be important to business owners. Tweet This

A 2014 study by staffing firm Robert Half indicated that 38 percent of employees would consider leaving a job because of non-competitive benefits and compensation, while 28 percent of CFOs would look elsewhere for the same reason. As reported by Forbes, a 2013 Careerbuilder survey found that, of those who were considering leaving their jobs, 58 percent of employees would be motivated to stay by improved benefits. While the cost of morale can't be measured in dollars, it's clear that what's important to employees should be important to business owners.

The Cost of Attrition and Recruiting

Researchers estimate that the true cost of losing the average employee is 20 percent of their salary (the cost of losing and replacing a key managerial or executive position can be up to 150 percent of that employee's salary). This equation factors in loss of productivity, loss of knowledge, overworked remaining staff, time spent recruiting, reviewing resumes and interviewing new candidates, not to mention the time spent training new hires.

The Cost of Reputation

Employees now have countless avenues to discuss their employers online. Employees who feel slighted over lack of benefits can speak their mind on a plethora of popular sites like Glassdoor or even recruiting sites like Indeed, which allow past and present employees to leave reviews. Defining moments such as new company policies, hot topics in the news related to business, a new wave of layoffs, and other major milestones that are perceived as being negative for employees often prompt new reviews.

Adding Up the Costs

How much do these costs add up to? What do the numbers look like for compliance with the ACA, versus non-compliance? Use our Obamacare cost calculator to see what the dollar amounts look like for your business.

ACA Pay or Play Calculator

While this calculator is for illustrative purposes only, it's clear that an apples-to-apples comparison of compliance versus noncompliance should factor in more than just penalty fees versus premiums. Employee morale, while harder to measure, comes with real costs.

The Big Picture

While it can be overwhelming to think about the costs associated with insuring every single one of your employees, the reality is only a percentage of your employees will actually take advantage of the benefits you offer, for a lot of reasons. Some will still consider the coverage unaffordable, some will already be insured by a partner or parent, and some will simply prefer to pay the individual fee imposed by the government rather than their premiums for insurance. In 2015, 75% of non-millennials took advantage of employer offered insurance, while only 44% of millennials participated in employer-provided insurance.

Investment Versus Cost

For employers who do decide to comply with the ACA, it can be gratifying to see employer-paid premiums in terms of an investment instead of a cost. And by incorporating other programs, practices and systems that add value while saving on your bottom line, it's possible to maintain and grow a productive company in terms of both cash flow and morale.

Understanding the Affordable Care Act in 2016
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