Previous post discussed the specifics of two businesses that are thinking about dropping their health insurance in 2014 and paying the penalties under ACA.
Now to get a feel for the impact on NPOs, I’ll revise that analysis by adjusting the data we see there to an NPO.
First scenario – currently providing health insurance to some staff
Let’s start with assuming the same facts except the organization is an NPO without the tax bite.
First company:
- current cost –$140k to cover 25 of 102 full-time staff
- full health insurance next year – over $500k
- no health insurance next year – $144k
The second company:
- current cost –$100k for 20 of 120 full-time staff
- full insurance next year –$600k
- no coverage next year – $180K
So for the first hypothetical NPO, dropping all health insurance would leave costs as is. Providing coverage would increase the budget about $360K.
For the second example, dropping all coverage would increase costs $60K. Providing coverage to all eligible staff would increase costs about half a million.
Second scenario – not providing health insurance this year
I’ll assume a different but not unlikely situation where the NPO does not currently provide health insurance.
First example discussed a company with 102 full-time staff. If that were an NPO that doesn’t currently provide any health insurance, this is what 2014 would look like:
- start health coverage next year– $500k
- don’t provide insurance next year – $144K
The second example is a company with 120 full-time staff and 130 part-time staff. Let’s assume that is an NPO that doesn’t provide health insurance.
- start insurance next year – $600k
- don’t provide insurance next year – $180K
Organizations with 102 or 120 full-time staff could ill afford the penalty of $144k or $180K, let alone swing an extra $500k or $600K for insurance.
Massive assumption
All of those insurance amounts assume the costs we see now without an expected 20% or more increase in premiums next year.
Time to start thinking
If you haven’t already been thinking about the impact of ACA, now would be a superb time to start.
If you haven’t started crunching numbers, this would still be a good time to begin. I hope these two examples from the WSJ give you a general framework on how to start your analysis. Modify as needed for your situation. These examples should give you a few pieces of info to at least do a quick guess on what next year might look like.