Published Monday, July 22nd 2013
Even though employers now have until 2015 to provide health insurance for employees under federal law, some local business leaders are doing their best to prepare for the mandate, even though they aren’t exactly sure how it will impact their businesses.
“There just seems to be so many unanswered questions,” said Mike Monen, who—along with this wife, Taylor—owns restaurants Community Pie, Urban Stack, Taco Mamacita, and Milk and Honey. “I feel like the delay is proof that some people might not be able to sustain through this type of expense. I think it proves the point that there are so many unanswered questions.”
April Wortham, market analyst with HealthLeaders-InterStudy, said that people have been confused and overwhelmed about the Affordable Care Act since it became law in 2010.
President Barack Obama’s Affordable Care Act will provide health care coverage to 30 million people.
Last summer, the Supreme Court ruled that the core of the health care reform act was constitutional. Some of the act’s requirements have already been implemented, and others will continue to be rolled out in coming years.
Because of the act, online exchanges are being created. Exchanges are where individuals and small business owners can shop for health care insurance.
Enrollment for the exchanges starts in October, and coverage will be effective in January 2014.
One of the requirements of the act is that employers who don’t already do so provide health care for their employees.
Last week, the House of Representatives voted to delay the requirement that employers provide health insurance, something Barack Obama’s administration was already doing, according to CNN.
Wortham said that—on a practical level—the delay won’t have a huge impact because the mandate impacts employers with more than 50 employees. And many employers with that many workers already offer health insurance.
According to the National Conference of State Legislatures, 98 percent of employers with more than 200 employees offer health insurance, as do 94 percent of employers with 50 to 199 employees.
But one group of businesses that is being impacted is the restaurant industry.
The Wall Street Journal recently ran an article about how some restaurant owners are starting to rely more on part-time employees in an effort to avoid the potential for higher health care costs under the federal insurance law.
But Monen, whose restaurants each have at least 50 employees, said he’s gone over details with his accountant and insurance broker and that he doesn’t think there are many good options to avoid the cost of the new mandate.
“Cutting serving or wait staff down to below 30 hours is one option, but I think that’s the most unfair thing to do,” he said. “That’s not a strategy I’ve been willing to take … We care about our employees and have always offered full-times jobs. I think that’s what everyone needs.”
And restaurants that do start cutting hours to employ more part-time workers are then forced to deal with workers who might have to work two jobs, Monen said. That brings on a new set of problems because then the employer is dealing with people who might have conflicting work schedules.
Another local restaurant owner, Mike Robinson of Fork & Pie and Brewhaus, said he already offers health insurance to employees who want it. He said he thinks that is part of creating a strong team and good work environment.
Preparing for the unknown
Monen and Robinson are both preparing for Affordable Care Act requirements, even though there is an element of uncertainty.
“We are definitely preparing—lots of proactive meetings with our accountants and tax people,” Robinson said. “I think all my friends with small businesses are putting together a tentative game plan. It’s such a massive amount of information.”
So there are still a lot of questions that many business owners need answered.
For example, is it cheaper to just take the financial penalty instead of offering insurance? Robinson said he thought it might be.
The penalty for business owners per year is $2,000 for each full-time employee or the equivalent. So part-time employees add up and count toward the total, Wortham said.
And penalties can add up, she said.
The Chattanooga Area Chamber of Commerce will soon start working with its members to educate them on the Affordable Care Act’s requirements, said Robert Bradham, vice president of public strategies.
“We are actually in the process of putting together something for our members,” he said. “It’ll be later this year.”
The chamber will host educational speakers from the insurance industry to speak to area small business owners, he said.
Wortham said that part of the reasoning for the delay in the employer mandate is that there are still a lot of unanswered questions and confusion for business owners.
But the delay doesn’t mean that business owners should put off educating themselves.
“The temptation is going to be for employers—large or small—to sit back and say, ‘We’ve got another year; we can chill out,'” she said. “But I would not advise that. There is plenty that businesses still have to do, regardless of this delay. It gives them another year to figure out those questions.”
Updated @ 8:24 a.m. on 7/22/13 for clarity.