Small business owners unsure about providing health care or paying penalty
BY AP Wire Service
Sunday, December 02, 2012
12/02/12 at 3:36 AM
NEW YORK (AP) - Rose Wang looks at her staff of 70 employees and wonders if she'll have to lay off some of them to comply with the health-care law.
The owner of Binary Group Inc., an information technology firm based in Alexandria, Va., is one of many small business owners who will be required to provide health insurance for staffers under a provision of the law that goes into effect Jan. 1, 2014.
Wang already provides insurance, but she has struggled with premiums that have soared as much as 60 percent annually. So she requires employees to contribute to their coverage. She's worried because she doesn't know how much she'll have to pay under the Affordable Care Act.
Wang's worry is a gut-wrenching dilemma that many small business owners are concerned that they may face. Now that President Barack Obama has won re-election, the health-care overhaul, which presidential candidate Mitt Romney promised to dismantle, is marching forward.
Companies must decide before the start of 2014 what they'll do to comply with the law. Right now, no one knows how much the insurance will cost, and owners aren't sure if they'd be better off not buying it and paying a penalty of $2,000 per worker.
The big challenge for most small businesses is that they don't have enough information to make concrete plans.
If Wang can't afford the insurance, she says that some of her staffers may have to go.
"I would have to say, 'Look, guys, you're family to me in many respects, but this family also depends on having the kind of cash flow available to keep the lights on and keep employing most of you,' " Wang says.
Not providing insurance and paying the penalty is another alternative. "That's what we're going to decide by 2014, if the math is so obvious it's cheaper for us to do the $2,000 per head," she says.
The health-care law generally requires that companies with 50 or more full-time workers provide health insurance for their staffers. If they don't provide any insurance, they'll have to pay the $2,000 penalty for each worker on their payroll.
If they buy insurance but it doesn't meet the government's tests for affordable coverage, they'll have to pay $3,000 for each worker whose coverage isn't deemed affordable. If that seems confusing, that's just the beginning.
There's a labyrinth of other details that include plans that can be "grandfathered" in and a maze of other fine points that small business owners are trying to decipher.
In some industries, owners are considering cutting employees' hours to less than 30 a week, which would take those workers out of the jurisdiction of the law. Restaurant owners are looking at that option after Darden Restaurants Inc. said in October it was going to try changing the mix of full-time and part-time workers at its restaurants including Red Lobster and Olive Garden. When full-timers leave, Darden will consider replacing them with part-timers, spokesman Rich Jeffers says.
Even though some key details of the health-care overhaul haven't been worked out - like how much insurance offered through the exchanges will cost - there is already a lot of information to sort through.
"It is like a sleeping giant woke up," says Pamela Ross, owner of New York-based Atlantic Human Resources Advisors. "They are very much paying attention because so many regulations kick in for 2014."
Some small business owners who already provide insurance are looking at the law and weighing paying penalties against continuing to provide insurance that is more expensive. One risk though is that dropping coverage may send a message to employees that the owner doesn't care about them. That could lead some workers to quit.
"They're looking at that and saying, 'Well, if I stop providing benefits for my people, am I going to lose good people to my competitors who may not be taking the same approach?' " Ross says.
But some owners are not worrying about the cost.
"We think it's important to provide our employees with health care," says Chap Gage, president of Susan Gage Caterers in the Washington, D.C., area.
Original Print Headline: A question of health care
Rose Wang, owner of Binary Group in Rosslyn, Va., has about 70 employees. She will have to decide whether she'll provide them with health insurance or pay a penalty for not providing coverage. J. SCOTT APPLEWHITE / Associated Press