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Thread: Affordable care?

  1. #1
    God/dess Zofia's Avatar
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    Default Affordable care?

    Is the Affordable Care Act coming to a strip club near you? For years, strip clubs have classified dancers as independent contractors and denied them benefits. A few states have pushed back against this classification, but, the IRS has been noticeably absent other than to provide a regulatory framework to determine if someone is an employee or not. That's about to change in a big way.

    Small businesses, defined as those with 50 or fewer, full time employees, defined as working more than 30 hours per week, are exempt from the Affordable Care Act. Also known as Obamacare. This is where things get tricky. The ACA puts the Internal Revenue in charge of enforcing the ACA's participation provisions as well as providing tax breaks for low income people who sign up for ACA. Forbes has a story going into some of the rules surrounding how employers will figure out if they are small businesses and thus exempt from the ACA. The President used the flexibility that he and he alone sees in the ACA to extend the deadline for small businesses to participate in the ACA until after next year's election. A bad idea on many levels, but at least it gives us small business owners time to figure out if we are small enough to avoid the ACA's penalties or if we have to comply. Compliance is yet another problem. Trust me, I have weighed the issue of continuing my company's health care benefits or terminating them in favor of sending my employees off to the ACA exchange. I ultimately decided that I would keep my company's heath care benefits because I think it's important to keep my employees productive. Private health insurance is the best way to do that. Even if it is expensive. I pay about $7,000/year for a single employee up to $13,000/year for family coverage. Since I pay it all, that means my lowest paid full time employee costs me about $65,000/year. In all honesty, that means my lowest paid employee better generate $130,000 worth of revenue. In other words, don't apply without a significant skill set to go with a high school diploma and a great work ethic. To be a successful applicant at my business, someone better come in with a community college technical degree, a HS diploma and a solid work history or off the charts recommendations from faculty.

    Back to strip clubs though, how do the new IRS regulations work? Well, the IRS will be assessing a penalty for any club with more than 50 employees that does not provide health coverage at least at the ACA minimum. How will the IRS determine how many employees a club has? Well, they have a 20 part test. One part is a contract. No written contract and they won't even look at the other 19 parts. A person working without a written contract specifically saying they are are an independent contractor is an employee. If there is a written contract, the IRS goes to the other 19 parts. Frankly too many to list here, but the list is exhaustive. I had a sit down with my accountant last week to discuss if we were subject to the 50 employee rule even though I offer health insurance, and pay for it. Because I already comply, she said there was no point in doing the analysis. But, she added, the analysis is roughly half an hour to an hour per person. More if it's a close call.

    YIKES! Do you know how expensive that is for a strip club? Figure 100 dancers at any one time, some coming in on a somewhat regular basis, some less so and some when they dang well please. Even 50 hours of an accountants time is some serious change. And all to be told, you probably need to count them. Also there is the full time (30 hours per week) rule and a separate rule for full time equivalents. So, if you have part time employees, add up their time per week and divide by 30. A business could be subject to the ACA even if it had only one or two full time employees but enough "full time equivalents." Giving everyone health insurance is probably a good idea. Doing it through the ACA is just expensive and probably doomed to failure.

    Z

  2. #2
    Banned Melonie's Avatar
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    Default Re: Affordable care?

    Do you know how expensive that is for a strip club?
    If the strip clubs institute schedule limits that do not allow any individual dancer to work more than 29 hours per week, it costs the club nothing ... because the 'employee' dancer is considered to be a 'part time' employee thus exempt from the ACA employer provided health insurance mandate.

    Also, in many states, clubs limiting 'employee' dancer hours to 29 max per week also saves the club the cost of worker's comp and disability insurance payments to the state insurance funds. Of the three clubowners I know that are forced to operate in an 'employee' dancer environment, two are planning to take the 'part time only' approach ... since they figure there won't be any problem hiring additional part time dancers, and since they figure the customers will appreciate having more girls to choose from. In regard to dancers currently working 40 hours per week being cut back to 28 hours ( with earnings dropping accordingly) the answer I got from one clubowner was 'it ain't my problem' !

    The one other clubowner I know that is forced to operate in an 'employee' dancer environment is thinking about a different approach ... requiring all dancers to work 40 hours per week via five 8 hour shifts ( closing Sunday and Monday nights ) ... but cutting the total number of dancers from the current 60 down to 40 or so. This clubowner also plans to start collecting 50% of all of the dancer's private dance and VIP sales. He figures that the dancers earnings will still actually increase somewhat ... although the dancers will be performing half again as many private dances and VIP's in the process. By dropping total number of employees under the magic number 50, most ACA related costs can be avoided altogether. This particular clubowner was also a partner in a second club ... but is selling his partnership interest to avoid a possible IRS interpretation that the 40 or so dancers remaining at his 'original' club plus some number of additional dancers working at the club in which he owns a partnership could be added up to a number higher than 50 'total' employees where heavy ACA 'employer' penalties kick in !!!

    The explanations I got all boiled down to the same point that 'there's no such thing as a free lunch'. Where 'labor' is plentiful and 'skills' aren't highly specialized, employers are going to pursue the 'part time employee' angle. Where 'labor' is more scarce, thus higher paying full time jobs with benefits are concerned, full time employees are going to be expected to be 'more productive' in exchange for the same sized paycheck plus new benefits.
    Last edited by Melonie; 02-17-2014 at 02:45 PM.

  3. #3
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    Default Re: Affordable care?

    ^^^ That's not necessarily true. In general, dissatisfied employees don't do as good of a job as satisfied employees. Full-time employees with benefits are more likely to be satisfied employees than part-time or temporary employees without benefits. When your business has a large number of dissatisfied employees, it can affect the bottom line. Walmart has discovered this and will be moving 35,000 part-time employees to full-time employees with healthcare benefits. Home Depot tried to boost profits by cutting full-time staff and replacing them with part-time employees. At first it worked, but eventually customer service declined, which resulted in customer satisfaction declining, which lead to a severe decline of same-store sales. See:

    http://www.forbes.com/sites/rickunga...ler-after-all/

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    Default Re: Affordable care?

    Wouldn't this cause every club to either go on a hiring freeze so they don't have more than 50 girls total, or cause them to force everyone on a strict clock-in clock-out schedule to make sure they hit their minimum # of hours per week?

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    Featured Member Vamp's Avatar
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    Default Re: Affordable care?

    Not everyone sees things the same way when it comes to small business and ACA...

    http://www.dailykos.com/story/2014/0...iness-Goldmine

    "Our former policy was equivalent to a silver plan plan under the ACA Marketplace so we asked each of our employees to go on-line into the Marketplace and find the cost of their individual silver plan options. We asked them to print out that section (which contains no actual, private, information). We calculated the median cost of a silver level plan for that person. Each employee now receives, on their paycheck, a line item called “Recommended Health Insurance Bonus” which constitutes one hundred percent of the median silver plan cost, as described above, plus the extra needed to allow for the tax hit so that each employee truly nets out the necessary amount for the insurance.

    Before the ACA we were covering seven employees at a cost of $6570.58 per month. Now we are providing for the coverage of eleven employees at a cost of $1863.76 per month. This is a savings of $56,481.84 per year!!!"
    Nature knows no indecencies; man invents them. ~ Mark Twain


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    Featured Member Vamp's Avatar
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    Default Re: Affordable care?

    For strip clubs, from everything I have read, would be best served by making all their dancers independent contractors as defined by the IRS. Which gives them a tax benefit and shifts the insurance issue to the employee.

    But until there as been more experience with ACA, in aciton and in lawsuits, no one is going to really understand the different ways around various issues.
    Nature knows no indecencies; man invents them. ~ Mark Twain


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    Banned Melonie's Avatar
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    Default Re: Affordable care?

    Before the ACA we were covering seven employees at a cost of $6570.58 per month. Now we are providing for the coverage of eleven employees at a cost of $1863.76 per month. This is a savings of $56,481.84 per year!!!"
    It's a savings to the Daily Kos, but they aren't accounting for the additional cost to taxpayers of subsidizing Public Health Exchange ~$150 monthly premium costs for coverage that higher earning unsubsidized Americans are paying $3-400 per month for. They also aren't accounting for the much higher annual deductibles their low pay rate employees must now pay. And there is a good chance that, for every employee that signs up for subsidized Public Health Exchange insurance coverage, Daily Kos will be hit with a $3000 'chargeback' by the IRS next year. This 'chargeback' was supposed to take effect this year, but was delayed by Executive Order. So, for the moment at least, Daily Kos is profiting handsomely at the expense of US taxpayers.

    The problem trying to assess the 'affordability' of Public Health Exchange insurance coverage is that the income based monthly premium subsidies vary widely versus the person's actual income ... such that earning an extra $1 per hour can wind up 'costing' an extra $100+ per month in health insurance premium costs. Similarly, assuming that the full Obamacare 'penalties' on businesses will actually come into effect at some point, the overall future costs to many 'employers' will become significantly higher than they are today.

    And, of course, this year's Public Health Exchange monthly premium price levels may increase significantly once the actual composition of the 'risk pool' becomes apparent ... with lots of pre-existing conditions + lots of older Americans, but few young and healthy Americans, versus this year's pricing 'assumptions'.

    Overall point is that virtually everything about Obamacare costs is a 'moving target' at the moment.
    Last edited by Melonie; 02-21-2014 at 04:24 AM.

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    Banned Melonie's Avatar
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    Default Re: Affordable care?

    Wouldn't this cause every club to either go on a hiring freeze so they don't have more than 50 girls total, or cause them to force everyone on a strict clock-in clock-out schedule to make sure they hit their minimum # of hours per week?
    Well, the key question at the root of the entire matter is whether dancers can maintain classification as 'independent contractor' business operators. If so, then clubs have NO obligations to provide health insurance, and face no additional costs for failure to provide health insurance, to dancers. Thus nothing will change, other than the 'independent contractor' dancer herself being faced with a mandate to either purchase health insurance coverage for herself, or pay a new 1-2-2.5% 'penalty' tax to the IRS for failing to buy health insurance coverage for herself. As a side note, the 1-2-2.5% 'penalty' tax to the IRS is already in effect ( from January 1 ) ... meaning that if you don't have health insurance you'll need to add an extra amount to your April 15th estimated tax payment to cover this new 'penaity' tax !

    However, if a successful lawsuit, a successful DOL ruling, etc. deems that dancers working at a particular club are to be considered 'employees', or if the club volunteers to treat dancers as 'employees', then a whole different scenario emerges. This scenario begins with the club facing a mandate to provide ACA 'compliant' health insurance coverage for any full time 'employee' dancers, or pay a new $3000+ per employee IRS penalty for failing to do so. So the easiest way for clubs in this situation to avoid insurance costs and the new IRS penalty is to limit dancers to 'part-time' status. That would require strict scheduling that limits individual dancers to working a maximum of 29 hours per week.

    If the club decided to operate with full time 'employee' dancers, then the club would face the decision of whether to provide insurance or pay the new IRS penalty. The simplest option for the club would be to plan on paying the penalty, and increase the club's 'cut' of full time dancer earnings to cover the extra $3,000+ per year in IRS penalties the club will face for failing to provide health insurance coverage. And, as was pointed out earlier, to minimize the number of employee 'penalties' it must pay, the club is likely to enact strict scheduling such that each full time dancer is required to work 40+ hours per week, which will also limit the total number of full time dancer 'jobs' available. With this option, dancers purchasing Public Health Exchange insurance coverage would potentially be eligible for taxpayer subsidized reduced monthly premiums ( if their incomes are less than $46k per year ).

    If the club decided to operate with full time 'employee' dancers, and the club also decides to provide health insurance coverage for those employee dancers, then a whole 'plate full' of options emerge. Clubowners would face a huge cost variable because ACA 'compliant' health insurance coverage mandates insurance pay for alcohol / substance abuse treatments, mental health treatments etc. in addition to paying for treatment of illnesses and injuries. I'm guessing that private insurance companies would consider 'strippers' to be a high-risk pool, with associated high price !!! Thus clubs may offer health insurance coverage, but at monthly premium price levels that are far higher than Public Health Exchange monthly premiums ... meaning that the full time employee dancers would probably NOT purchase health insurance through their employer club. This would also mean that the club could avoid the $3000+ per dancer new IRS penalty, because no penalty is due if the employer provides the option to buy insurance but the employee chooses not to buy it !

    However, if an employee chooses not to purchase health insurance offered by their employer, they become ineligible for taxpayer subsidies on Public Health Insurance monthly premium costs ... meaning that said employee dancers may face a choice of paying $400 per month to the club, or paying $350 per month to the Public Health Exchange, or paying X additional dollars in new IRS 'penalty' tax for failing to buy insurance.
    Last edited by Melonie; 02-21-2014 at 03:15 PM.

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