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The Affordable Care Act: Large Employers Should Consider All Their Options


Many large companies are determining how they will handle the changes coming in January 2014 with the Affordable Care Act. For a company who employs 50 or more full-time employees that is already offering health care benefits, one option that I am reading about over and over is:

Employers would terminate their current health insurance plan; pay the penalty for each employee, (approx $2,000); and force employees to shop in the state and federal exchanges. While this may seem cheaper, companies need to consider that they will lose their tax deduction for providing health insurance benefits not to mention the consequences on employee morale and recruiting efforts.

Another option that has emerged is to continue to offer health insurance but through a Corporate Exchange instead. According to the Wall Street Journal, both Sears Roebuck and Darden Restaurants (which operates Olive Garden, Red Lobster and other dining establishments) announced in October they had signed on to Aon Hewitt’s Corporate Exchange. Sears has approximately 90,000 employees while Darden has about 45,000 that will be participating in the exchange. Through the Corporate Exchange, not only can an employee pick different insurance coverage, but they can pick different insurance providers. These options are similar to the ones that will be available under the public exchanges, but large companies with more than 100 employees are not eligible to participate in the public exchanges at least until 2017.

Under this option, there is no penalty as the group health plan is still fully compliant with the Affordable Care Act. The employer then decides how much of a subsidy to provide employees to purchase coverage. Ideally, this subsidy provided to employees would be evaluated annually to keep up with the potential increase in cost of coverage. The employee then takes their subsidy and can evaluate various provider options and levels within the exchange and pick the best plan for them. The more exchange participants, the greater the economies of scale. This type of exchange will supposedly keep costs for the employers lower because insurers are forced to compete with one another to attract members in the exchange to their plan. Besides the potential cost savings for the employer, employees are happier under exchanges because they can pick the type and level of insurance that they want. A single person in their 20’s can choose a relatively less expensive plan while someone in their 50’s can opt for more coverage.

This is a novel concept that if it works as Aon plans, will sure to be replicated and remain a viable option for employers.




It has been known for quite some time that women make up most of the purchasing decision power in households but their increasing presence in the workforce is becoming nearly as significant. According to a recent post by XYZ University, these are a few of their interesting statistics:

Even from only 10 years ago, these are huge changes and these trends do not show any indication of reversing. This impacts today’s businesses in two major areas: employees and customers.

Having more female employees brings new skills as well as challenges to the table. Many studies have shown that women tend to have a management style that is more consensual and inclusive which can be an advantage with today’s increasing social and crowd sourcing business methods. Also with more women working, maternity leave and child care, for example, will become bigger issues that companies must face and deal with. Further with more women in leadership roles, more men will take on more responsibilities at home leaving them less willing to sacrifice family for work.

As more women take on leadership roles and more men take on larger family roles, the change in these gender roles may change who has been the dominant purchasing power of households. Additionally, the upwardly mobile urban single woman may become a significant customer in areas of serious investments such as homes and travel.


A few weeks ago, I, along with the rest of the world, heard that Hostess and their unions could not come to a new personnel agreement and would be going bankrupt. The television news stations all started blasting their sensational headline that Twinkies were going the way of the McDonald’s Arch Deluxe, Crystal Pepsi, and the Delorean and would no longer be made. The news showed clips of people in grocery stores with their carts full of all sorts of Hostess products for fear that they would never be able to enjoy them again. The next morning I went to my local convenience store to get a paper and the Hostess stand was empty. They were sold out of Twinkies, Ding Dongs, Wonder Bread, Donettes and Sno Balls!

It makes for a great headline that an iconic product like Twinkies will soon be defunct, but this distorts what will happen after bankruptcy liquidation. As evidenced by the quick sellouts of Twinkies, this is still a product that is very much valued and in demand. I am not aware of all of Hostess’ internal financial struggles, but I’m sure Twinkies can be profitable and that there’s at least a few other companies in the world who believe the same as I do and have the financial clout to do so. During bankruptcy liquidation, the trustee will try to sell all the brands and facilities to get the most value to pay Hostess’ creditors. Some person or group will buy the Twinkies brand and recipe and I’m sure they will start producing and selling millions of Twinkies across the United States. The shoppers who filled their carts will have alleviated their short term cravings, but for the rest of us, rest assured. Twinkies will be populating the grocery shelves again in no time!





With so much of your retirement funds invested in the market these days, the thought of retirement is a risky proposition.  I personally don’t have plans to retire anytime soon; however, listening to Bill Hampel, an economist for the Credit Union National Association, speak at the AICPA National Conference on Credit Unions, one take away for me was “how much shock are you willing to take to your portfolio?”. This is something you need to determine up front before you retire. Based on historical data, this can be as much as a 50% hit.

So as you work with your financial planner to determine that timeline when you can retire, keep in mind that the market is volatile. Why do you think that so many people have continually delayed their retirement date? I find it interesting that when you ask someone that is heading towards a “normal” retirement age when they plan to retire, the answer is typically five years.
What is so magical about this FIVE year number? Is it a safe number? Does it appear to keep you vested in the company and not perceived as a short timer? Is it real? Or will it keep getting deferred?

The winners in this downturn of the economy have been the ones that have had the ability to defer their retirement. Not so lucky have been the ones that retired and then saw their nest egg and home values plummet. Until we see a resurgence of the economy we will probably continue to see the retirement age generation pushing out that date FIVE more years.



Barnard Vogler & Co.
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