Pay A Penalty? Biz Owners Face Health Care Dilemma
|JOYCE M. ROSENBERG, AP Business Writer|
The owner of
Wang's worry is a gut-wrenching dilemma that many small business owners are concerned that they may face. Now that President
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. "It would have to come down to that."
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
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
In some industries, owners are considering cutting employees' hours to under 30 a week, which would take those workers out of the jurisdiction of the law. Restaurant owners are looking at that option after
"That is not in our plans," he says.
Even though some key details of the health care overhaul haven't been worked out _ like how much insurance offered thought the exchanges will cost _ there is already a lot of information to sort through. Figuring out the details is keeping human resources consultants and benefits brokers busy.
"It is like a sleeping giant work up," says
There are so many unknowns about the law that Campus Cooks is hiring an employee to determine what the company's options are and how much they'll cost. The provider of dining services for fraternity and sorority houses in the Midwest,
"I don't know what's in the law," says
Reeder says he can't afford to offer insurance now and that's something he regrets. And he says he might have to pay the penalty if turns out to be cheaper than providing coverage.
He says he knows this much: "I'm not approaching this by cutting hours or raising prices."
Whether Reeder pays the penalty or buys coverage, Campus Cooks will have to come up with money to cover the expense. "We have to look at our business and see how to run it more efficiently, We have to renegotiate our food costs, cut office expenses, streamline our technology," Reeder says.
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.
"Not offering health care is not necessarily the best way of attracting talent," he says.
Companies that won't be bound by the new law, but that do provide insurance will be looking to see if they can save money through the exchanges.
"If it were cheaper, we'd probably drop insurance through us, and we'd probably give them a raise to cover what we had been covering."
Some small business owners are thinking about paying the penalty because they genuinely believe they won't be able to afford to buy insurance, says
Nassif also says he has clients who have more than 40 employees and who are holding back from hiring because, when they reach the 50-employee threshold, they'll have to start paying for insurance.
But some owners are not worrying about the cost.
"We think it's important to provide our employees with health care," says
The company already provides insurance for its 110 employees, and Gage doesn't see the law as affecting the business.
"We'll react and comply with everything we need to do," he says.
|Copyright:||(c) 2012 The Associated Press. All rights reserved.|