The Affordable Care Act (ACA) has had a tremendous effect on employment practices across the U.S., and the security industry was no exception.

Multiple Levels of Mandate

Under the ACA, employees were required to sign up for insurance by January 2014, or else pay a tax penalty for each adult and child in the household. The penalty increases substantially each year from 2014 to 2016, and then tracks with inflation starting in 2017.

A separate set of mandates applies to employers. If employers with 50 or more employees do not provide an option for employees to avoid the tax penalty, the employer can be penalized up to $3,000 per person. A company with 1,000 employees can incur tax penalties of $2-3 million.

Challenges of the ACA for Employers

Until the ACA, many security companies offered low-cost insurance plans, often called mini-medical, so that they would have some kind of medical insurance to offer their employees. However, these plans are now insufficient for employers to meet the new ACA requirements forcing employers either to offer more comprehensive health plans or to push employees to seek coverage under the health insurance exchanges. More comprehensive health plans, of course, result in higher costs.

One of the biggest challenges for employers is determining exactly what the costs will be, since it is impossible to predict the percentage of employees who will enroll in the new insurance plans. This is, in turn, is further complicated by penalties if enough employees do not sign up.

The legislation is especially challenging for the security industry, where pennies per hour can determine the outcome of a multimillion-dollar contract and the profitability of the security company.

Sunstates Couples Client Service with Employee Care

Some security industry employers are gambling that the bottom-line costs will be lower if they simply pay the taxes and penalties, rather than providing health coverage.

In advance of the new rules, Sunstates Security has provided insurance to our employees at multiple levels, depending on their needs. One result, of course, is that our costs will increase, much like increased fuel costs of recent years have affected shipping companies.

Nevertheless, Sunstates Security believes in taking the high road for two reasons. President Glenn Burrell says, “Doing the right thing for our employees increases the quality of service for our clients.” Employees that feel supported by their employer do a better job, and reduced turnover increases employee investment not only in Sunstates, but in dedication to our clients.

For more information, please contact Sunstates Security. We have specialists available who can answer your questions on the ACA.

Source: Thurm, Scott. “Firms Drop, Rather Than Upgrade, Cheapest Health Plans.” Wall Street Journal. 25 Sept 2013.