ST R ATEG IES
Human Resources (Continued)
complication to this issue is the fact that the
subsidies are based on household income, so if one
of your employees has a spouse who works, you may
not have all of the information necessary to evaluate
their subsidy level. The chart on page 1 lists the
threshold amounts that may create this issue.
The employer mandate may impact the mix of
total rewards at an organization.
The ACA mandates coverage or penalties for lowpaid employees, many of whom were not previously
covered by health insurance. Economics 101
illustrates how increases to the minimum wage result
in companies seeking creative alternatives to more
labor and thus higher unemployment. While the ACA
does not directly increase the federal minimum wage,
it does directly increase the cost of labor, which has
the same impact.
The individual mandate increases cost of living
– particularly for lower paid employees.
As indicated above, the delayed employer mandate
is effectively an increase in the minimum wage.
However, the individual mandate (which has not been
delayed) increases the cost of living. When individuals
are forced to buy health insurance (whether they want
to or not), they have less income available for the
necessities of life.
Many are predicting that industries with a
large number of low-wage workers will move
many of their employees to the state exchanges
for health insurance. As they shift the cost of
insurance to employees, they may find that they
need to increase base pay in order to be market
competitive. It is hard to predict the ultimate
direction of the ACA, but in the short term it is
reasonable to expect that employers who offer
health coverage to their employees will be able to
pay less in compensation than those who don’t.
Be sure to reach out to an experienced
compensation professional in order to keep up
with trends and best practices as organizations
experiment with different mixes of pay
EDWARD R. RATAJ
CBIZ Human Capital Services • St. Louis, MO
314.692.5884 • email@example.com