Payroll Accounting – Make Sure Your Health Care Insurance Payroll Deductions Are Within Law
As you are probably aware things are changing very fast with regards to the new health care law which was signed by President Obama, and this very much affects payroll accounting. Just because a small business is deducting employee’s healthcare insurance costs from the employees paychecks, does not mean that plan is adequate or within the law. If it is not within the law, the company can be fined on top of the cost it puts forth to complement the payroll deductions it takes out from employee’s paychecks.Consider if you will the law is not as simple as you might think, and there are phase-in periods and drop-dead dates with businesses; large or small must comply. Let’s say you are a small business accounting service and you have many small business clients. If you do their payroll accounting also, and you don’t advise them of these new laws, because perhaps you don’t understand the full application of the law, or even what the law is demanding at this time – that you could be an accessory to business malfeasance, and you could find yourself in a lawsuit over this whole issue.It is not my intent to scare you, it is not my intent (at least in this particular article) to slam the Obama Administration for the messes they may have or have not created for small business – rather, I want to get you to think about payroll accounting, and the implications if things are done properly as per this new law.There are significant fines if a business does not provide the proper healthcare insurance coverage for their employees. And a small business may decide that it wishes to purposely not comply, and rather pay the fine. This could be less expensive than paying both healthcare insurance now, and the fine later. Of course, that’s an executive decision also, with other implications as well – namely disgruntled employees.Why are there big fines for noncompliance of this issue? Well, the Congress reasons that if it has a large fine, then all the businesses will comply, but businesses also need to make money and retain a profit and do what’s most efficient. Therefore, if the fine is less than the cost to provide insurance, they’d be smarter to pay the fine, and let those employees figure out how to get their own health care insurance from the federal government.Likewise, many of the larger businesses such as large franchise organizations are filing for a waiver for their particular health insurance program which they’ve had for decades, because they believe their fast turnover, plus the needs of their employees don’t warrant such intense payroll deductions for health care insurance. Nor do their employees wish to pay it out of their paycheck. Many of their employees are just barely getting by, and nearly at the poverty level. They can’t afford it. Please consider all this.