The Affordable Care Act has created heated debates, public and private confusion, and a strong reaction from health insurance providers across the country. There is no debating that this legislation, paired with other changes, has driven health care premiums higher for large businesses. As we look at delays in implementation, we see that the damage to health care costs has already been done. The reaction by insurance companies to dramatically raise rates has happened, and whether the laws are implemented in 2014, 2015, or never, the negative impact is being felt now.

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These higher costs have made it more expensive to maintain a full-time workforce. As costs continue to rise, management teams will realize that incorporating part-time employees and more controls to stay in compliance may be only part of the strategy to control labor costs. Yes, this "evolution" will create the need to measure workforce hours on a more granular level in order to comply with government rules. After all, compliance is something the government does not take lightly, and the IRS is the one managing this new law. The major strategic shift will come from a different place. Leveraging overtime may become the most effective tool in your arsenal.

A Brief Look at the Affordable Care Act

The ACA has some very real implications for employers with more than 50 full-time equivalent employees. With that number of equivalent employees, you are categorized as a mandatory participant in the new health care requirements. 

Health insurance companies fear that their cost of doing business will rise quickly due to the new rules regarding coverage. They have been raising insurance premiums as fast as they can ever since the ACA surfaced as potentially viable legislation. This means that the cost of benefits for full-time employees has risen significantly, and there appears to be no end to this trend.

With mandated insurance requirements for all Americans, the cost of care in many cases will shift from government assistance to private insurance companies. Those with expensive health problems cannot be denied coverage, and because of this, the overall burden on the insurer will rise, even as younger, healthier people are forced to join as well. The good news for the taxpayer is it may lower their burden as government assistance is relied on less.

To manage the dramatic rise in insurance rates, the federal government has enacted new rules stating that if an insurer is going to raise rates by more than 10%, they must submit their intended numbers to regulatory officials for approval. This may thwart some of the larger increases, but an 8% or 9% increase in health care costs may be enough to dramatically change how many hours your employees work.