Is Obamacare a ticking time bomb for some businesses?
The implementation of Obamacare has meant a big change for many businesses and it's not just the small companies that are potentially being hurt. Numerous businesses in several industries are feeling the burden.
The Affordable Care Act or Obamacare, as it's often called, affects companies with 50 employees or more and requires them to provide healthcare coverage. However, it only affects those who work 30 hours or above.
One way many companies have avoided the law by cutting down their full-time staff and giving them less than 30 hours.
While the number of people who are employed went up in 2013, the number of those with 30 or more hours actually decreased. This is a strong indication of how the Affordable Care Act is affecting businesses in many industries.
Read related articles in Business Review USA
- Fighting workplace wellness
- Financial challenges facing small businesses in 2014
- The best budgeting apps for SMEs
How businesses are coping
Many companies in the food industry are responding by hiring part-time workers instead of full-time to avoid paying for healthcare.
Some companies that make medical devices are looking at moving overseas. They have already let go many employees. Stryker has cut its workforce by 1,000.
State governments are also dealing with the same issue by cutting staff. They are also cutting hours. For instance, the Alpine School District located in Utah gives employees 27.5 hours per week at most.
Hospitals are another industry that is making cuts to deal with Obamacare.
They are cutting jobs and figuring out how to make a budget that is prepared for the additional costs. For instance, the premiere Cleveland Clinic announced that it would reduce its $6 billion budget by five to six percent.
Colleges also have to figure out how they are going to handle the additional expense. Some of them are cutting workers' hours while others are reducing staff.
How businesses can prepare
It's not too late to begin preparing for the ramifications of the Affordable Care Act. Talk to your accountant to find out what you are required to do and what kind of credits you can claim.
For instance, some small businesses can receive tax credits if they offer health care plans to their staff. You also need to know how many employees you have. While this is a simple process for some small businesses, it can be confusing to companies that employ temporary or seasonal staff.
Talk to your accountant about creating a budget that covers your expenses if you are required to participate.
You may have to look at some cuts in other areas. While this may mean cutting workers or their hours, you may be able to find other ways to afford the extra expense.
Businesses and organizations are finding different ways to deal with the effects of Obamacare.
Many times it impacts those who work for the companies. This only adds fuel to the fire for the opponents of the healthcare act who say it will hurt jobs and the economy.
Regardless of anyone's opinion of the law, everyone must deal with it one way or another.
About the author
Joyce Morse covers an array of subjects, among which include small business, marketing and social media.
Six issues at the top of tax and finance leaders’ agenda
New Deloitte research reveals that tax leaders are under increasing pressure to add strategic value as companies accelerate business model transformation, from undergoing digital transformations to rethinking their supply chains or investing in green initiatives.
According to Phil Mills, Deloitte Global Tax & Legal Leader, to “truly deliver value to the business, the tax function needs to rethink its resourcing model and transform its technology infrastructure to create capacity and control costs”.
And the good news, according to Mills, is that tax and business leaders have more options at their disposal to achieve this.
Reflecting the insights of global tax and finance executives at global companies, Deloitte’s Tax Operations in Focus study reveals the six issues at the top of tax and finance leaders’ agenda.
Trend 1: Businesses seek more strategic counsel from tax
Companies are being pushed to develop new digital products and distribution channels and accelerate sustainable transformation and this is taking them into uncharted tax territory. Tax leaders say their teams must have the resources and skills to give deeper advisory support on digital business models (65%), supply chain restructuring (49%) and sustainability (48%) over the next two years. This means redrawing the boundaries of what tax professionals focus on, and accelerating adoption of advanced technologies and lower-cost resourcing models to meet compliance requirements and free up time.
According to Joanne Walker, Group Tax Director, BT Group PLC, "There’s still a heavy compliance load today, but the vision for the future would be that much of that falls away, and tax people become subject matter experts who help program the machine, ensure quality control, and redirect their time to advisory activity.”
Trend 2: Tipping point for resourcing models
Business partnering demands in the tax department are on the rise, but 93% of tax leaders say their department’s budget is remaining flat or falling. To ensure that the tax function can redefine itself as a strategic function at the pace that is required, leaders are choosing to move increasing amounts of compliance and reporting to a combination of shared service centers, finance departments, and outsourcing providers that have invested in best-in-class technology.
Trend 3: Digital tax administration is moving faster than expected
in addition to the rising focus of the corporate tax department partnering with their business counterparts, transformative changes to the way companies share tax information with revenue authorities is also creating an imperative to modernize operations at a faster pace. Nine in 10 (92%) respondents say that shifting revenue authority demands on digital tax administration will have a moderate or high impact on tax operations and resources over the next five years—and several heads of tax said the trend is moving faster than expected.
"It’s really stepped up in the last couple of years," says Anna Elphick, VP Tax, Unilever. "Tax authorities don't just want a faster turnaround for compliance but access into a company’s systems. It's not unreasonable to think that in a much shorter time than we expect, compliance will be about companies reviewing a return that's been drafted by the tax authorities."
Trend 4: Data simplification and lower-cost resourcing are top priorities
Tax leaders said that simplifying data management (53%) and moving to lower-cost resourcing models (51%) must be prioritized if tax is to become more proactive at delivering strategic insights to the business. Many tax teams are ensuring that they have a seat at the table as ERP systems are overhauled, which is paying dividends: 56% of those that have introduced NextGen ERP systems are now highly effective at supporting the business with scenario-modeling insights. Only 35% of those with moderate to low use of NextGen ERP systems said the same.
At Stryker, “we automated the source P&L process for transfer pricing which took a huge burden off of the divisions," says David Furgason, Vice President Tax. "Then we created a transfer price database to deposit and retrieve data so we have limited impact on the divisions. We are moving to a single ERP platform which will help us make take the next step with robotics.”
Trend 5: Skillsets are shifting
Embedding a new data infrastructure and redesigning processes are critical for the future tax vision. Tax leaders are aligned — data skills (45%) and technology process experience (43%) are ‘must have’ skills in a tax department of the future, but more traditional tax specialist knowledge also remains key (40%). The trick to success will be in tax leaders facilitating the way these professionals, with their different backgrounds, can work together collectively to unlock lasting value.
Take Infineon Technologies, which formed a VAT technology and governance group "that has the right knowledge about how to change the system to ensure it generates the right reports", according to Matthias Schubert, Global Head of Tax. "Involving them early was key as we took a greenfield approach, so we could think about what the optimal processes would look like and how more intelligent systems could make an impact
Trend 6: 2020 brought productivity improvements
Improved productivity (50%) and accelerating shifts to remote working (48%) were cited as the biggest operational benefits to emerge from COVID-19-driven disruption. But, as 78% of leaders now plan to embed either hybrid or fully remote models in the tax function long term, 34% say maintaining productivity benefits is a top concern. And, as leaders think about building their talent pipeline and strengthening advisory skill sets, 47% say they must prioritize new approaches to talent recognition and career development over the next two years, while 36% say new processes for involving tax in business strategy decisions must be established.