OBAMACARE: CRUNCHING THE NUMBERS [Indianapolis Business Journal (IN)]
By Wall, J K | |
Proquest LLC |
The biggest changes from
That means Hoosier employers have to make decisions about how to handle the health reform law right about now.
Many have started crunching detailed numbers to cost out their options.
Some are weighing how much they would save by not offering health insurance. Instead, they would pay new federal penalties and pay to help employees find
individual insurance policies in a new federally run health insurance exchange.
Others are wrestling with whether to extend their health plan to their part-time workers to avoid the federal penalties.
Still others are just trying to understand whether their premiums will go up or down once most of Obamacare takes effect on
"It is truly a new landscape when you look ahead to 2014, and a lot of that is unknown," said
But now, three years after the passage of the Patient Protection and Affordable Care Act, enough is known that most employers can make decisions about what to do for next year.
A key hurdle was crossed on
"I came back to work on
Below, three
Scotty's Brewhouse
Either way Scotty's Brewhouse cut it, it looked like
The company has 800 employees, but it provides health insurance to only 65 salaried staff members. As at many restaurants, hourly employees aren't eligible for Scotty's health plan.
Or else Scotty's could offer health insurance to those employees, which it figured would cost about
Both options would hammer Scotty's annual profit - after debt payments and capital purchases - of about
"We would definitely have to slow down our expansion," said
"We're going to have to slow down either way," she added.
Scotty's still plans to open restaurants in
Scotty's also worked with First Person to cone up with a plan to mute the impact of the health reform law.
They scrutinized more closely the 154 employees who worked roughly 30 hours per week. Of those, it found that 31 already worked 35 or more hours per week.
Scotty's store managers identified another 30 employees who worked 31 or 32 hours per week, but who were deemed critical to keeping Scotty's kitchen and hosting operations ahead of its competition.
The other 93 who work about 30 hours per week will now be "managed down" to just under 30 hours per week, and will not be offered health insurance.
Scotty's estimates that this plan will cost it
Four-year-old craft brewer Sun King has never offered health insurance to its employees, but it has always planned to do so once it could afford it.
The health reform law is forcing the company to make a decision now.
Sun King has 36 full-time employees and 60 part-timers, most of whom are in their 20s or early 30s, and who don't typically use a lot of health care.
The company expects to have 60 full-time-equivalent employees by 2014. And if it chooses not to offer health insurance, Obamacare will require it to pay
So that's a cost of
That's significantly less than what Sun King would pay if it starts a health insurance plan. President
Costs are difficult to estimate because not all employees who are offered health insurance will take it. Even though in 2014 most adults will face fines if they do not buy health insurance, some could be covered by their spouse's health insurance, and workers 26 and younger could remain on their parents' plan. Others may simply pay the fine, which starts out at only
Robinson budgeted
Sun King already spends
The company could buy six brewing tanks or three delivery trucks for the same amount of money it will spend - even after figuring in tax benefits - on health insurance.
"We will grow at a slower speed because of health care reform," said Robinson, sitting behind his desk in a former auto manufacturing facility cast of downtown. He estimated Sun King's growth would drop from 20 percent to about 17 percent or 18 percent if it adds a health insurance plan.
But with revenue projected to hit
As soon as
The 1,500-person company, which built the headquarters for the
That's because the exchanges offer federal subsidies to cover some of the cost of health insurance.
But an analysis by Wilhelm's benefits adviser,
"Our goal was to get out of this game," said
There are a slew of factors that will drive up costs in 2014. The health law taxes health insurers, who will likely pass that on to employers as a 2-percent to 3-percent premium increase. There are per-employee taxes employers must pay to help the federal government pay for "transitional reinsurance" and new kinds of medical research.
Taxes on drugs and medical devices will also boost health care prices higher. And the penalties on individuals who don't buy insurance will push more people into employer plans, also driving up overall costs.
"I'm just concerned there are employers out there who are going to be staring a substantial increase in the face who are not ready for it," said
Late last year, Apex did a long-range projection for Wilhelm's health insurance premiums, which found they are likely to rise 20 percent in the next year and a total of 70 percent over the next six years.
That's quite a hit higher than the 50-percent increase Wilhelm experienced during the last six years.
While Wilhelm would not disclose how much it spends per employee on health benefits, the average company in
If Wilhelm were consistent with that number, its current health benefits spending of
Those rising health care costs immediately affect the wages of Wilhelm's unionized workers, because Wilhelm pays a flat rate to the union health plan, which doesn't rise until the next contract negotiation.
But higher health insurance costs could also hurt Wilhelm's ability to hire and move into new markets, said President
"The Affordable Care Act was supposed to drive the line down," Kenney said of projected health insurance costs. "But what we're seeing is that it's not reducing estimates."
Case-by-case math
Each business has to run its own numbers to find the most cost-effective future in the new world of health insurance.
Scotty's Brewhouse
Give part-timers health insurance:
Don't and pay penalties:
Add health insurance:
Don't and pay penalties:
Six-year rise in premiums before: 50 percent
Six-year rise in premiums after: 70 percent
Note: Figures are company projections for 2014. For Wilhelm, projections are for 2014-2019.
Sources: the companies
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