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Saturday, Oct 25, 2014
Health & Fitness

Small-business owners fret ACA’s unforeseen effects

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TAMPA — At first glance, it didn’t seem as if Angie Short’s young, small company would be affected by health care reform.

With just 10 full-time employees, she isn’t required to offer health insurance; the business penalties within the Affordable Care Act apply only to companies with 50 or more workers.

But after doing a little digging, Short realized she still has a lot of questions.

How does the law affect the health care stipends she now provides workers? How will her employees buy insurance in the future? Does the law mean her technology staffing company, Source Select Group, has to provide health coverage to the temporary workers it places?

Oh, and here’s the big one: How does her company stay relevant and survive when the Affordable Care Act is changing the way businesses large and small manage their workforce?

“Technically, I don’t have to do anything,” Short said. “But to stay competitive, you should do something.”

Small business owners and their employees in Tampa and across the country are among the groups most affected by the Affordable Care Act, initially passed in 2010 and battled over ever since in legislatures and court — and in the court of public opinion.

On Jan. 1, nearly all Americans will be required to have health insurance, including millions of currently uninsured workers at companies with 50 or fewer employees. The bosses still don’t have to offer health plans, but how a company handles the changes to health insurance will dramatically affect the bottom line — and every employee’s personal budget.

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The American economy depends on small businesses. An estimated 75 percent of U.S. companies today have 50 or fewer full-time employees. That’s why major parts of the Affordable Care Act — including the Health Insurance Marketplace that opens for business Oct. 1 — were designed to appeal to small businesses and to workers who must buy their own coverage if affordable options aren’t available through their employers.

In 2012, just 30 percent of Florida companies with 50 or fewer workers offered health insurance to those workers, research from the Robert Wood Johnson Foundation shows. (By contrast, 98 percent of the state’s large companies offered plans.)

It’s no surprise that cost is a major factor. American businesses of all sizes spent an average of $11,786 per employee for family health insurance coverage last year, according to the 2013 Employer Health Benefit Survey.

To help fit that significant contribution into a smaller company’s smaller budget, the government has offered a financial incentive: For the past two years, the Affordable Care Act has provided tax credits to qualified businesses offering preventative and medical health coverage to employees.

That offer continues. But starting Jan. 1, it will apply only to companies that sign up for plans through a new Small Business Health Options Program (SHOP), located on the online Health Insurance Marketplace.

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Some small business owners may opt out of offering insurance on philosophical grounds, while many will find that offering health insurance simply won’t fit into their budget, no matter how much they want to make it work.

Still others will see that the decision-making isn’t as daunting as it seems, said Barry Rubin, whose Gulfport time management and tech support company, Time Systems, has offered health insurance to its seven employees since 2001.

“Not much is going to change for us,” he said of his company’s policies, which are managed by an employee leasing company that bundles small companies together for better prices on monthly premiums and other costs.

But the law will require a fundamental change to a restaurant model that previously relied on mostly part-time workers, said Don Fox, chief executive officer of Firehouse Subs, which has 635 sandwich shops in 36 states. Many locations are franchise-owned and fall into the small business category.

Firehouse Subs will now offer health insurance to full-time workers at its company-owned locations, translating to about three of the roughly 17 employees staffing each store, Fox said. The added financial investment means full-time workers who once worked 30 hours a week will be expected to work a full 40.

“They need to take a whole new fresh look at how they structure their workforce,” Fox said.

Short, with her 10 full-time employees, said she is curious about how the SHOP options compare to what her company now offers. For the past several years, employees have received a flat $100 a month to spend on whatever health insurance they want. The company has been unable to spend more.

Though offering insurance now could cause the company’s monthly investment to skyrocket, it may be time to make that investment, Short said, because good workers who don’t meet the law’s requirements might decide to look elsewhere for employment.

“Ultimately it will affect our rates. But for me, it’s an opportunity,” she said.

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Rubin, who also is treasurer of the Gulfport Area Chamber of Commerce, said he frequently talks with business owners who bemoan the health insurance requirements. It’s the fear of the unknown, he said, comparing it to worrying about a threatening hurricane.

Five days before a storm comes, the media and the community are in “a tizzy,” stocking up on nonperishable foods, water and gas, Rubin said. “But then the storm doesn’t even knock over a lawn chair.”

The real catastrophe would be if he or one of his employees were to become seriously ill and had no insurance, said Rubin, the father of a pre-teen.

“I would lose everything I have worked so hard for … to make my family comfortable,” he said. “It would disappear in a matter of months.”

Of course, the confusion surrounding the 2,000-page health care law, which is packed with new regulations for businesses of all sizes, doesn’t help the gloom-and-doom attitudes. In addition to a list of various business-related taxes, small employers who choose to offer health care plans must meet a specific list of health services and treatments. And the plans can’t cost more than 9.5 percent of an employee’s salary.

That’s no easy undertaking. The difficulty of reporting and implementing these requirements prompted the U.S. Department of Health and Human Services this summer to delay many of them for a year. Penalties for businesses — large and small — that fail to meet requirements won’t be enforced until 2015.

Short, who is moving forward with plans to offer insurance of some sort, said she prefers to look long-term. It wouldn’t surprise her if eventually the requirement that employers provide insurance applies to companies of all sizes. Why postpone finding out about the costs and options involved, she said.

“Now they have the rule involving 50 full-time employees. … But it’s only a matter of time before it affects all of us.”

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And while small businesses don’t have to make changes and large companies can wait for 2015, their workers still must comply with the Jan. 1 deadline. Individuals working full time, or those who have earned enough from part-time work to have to pay income tax, must purchase insurance.

Many lower-wage workers likely will be eligible for subsidized coverage through the government’s Health Insurance Marketplace. They will pay far less than they might with a workplace plan.

“I think I owe it to our employees to tell them up front where they stand,” said Fox, of Firehouse Subs.

He said some of his employees mistakenly think they will have no out-of-pocket costs. Informal focus groups found many employees think they would have pay nothing or no more than $5 a month in premiums, he said.

“It wasn’t uncommon months ago to ask employees what it was they thought they were getting, and they said, ‘free health care.’”

The amount they will have to pay remains uncertain — at least until Oct. 1, when the Marketplace opens and they can compare prices.

Fox said the cost is going to be especially tough on the lowest-paid workers, who would have been eligible for an expanded Medicaid program.

Florida is one of 16 states that opted to not increase the income threshold for government-backed insurance that now covers poor children, pregnant women and the disabled. More than a million adults would have qualified for Medicaid under the new income threshold.

Fox said state leaders and business owners need to put politics aside and focus on making the law work.

It’s going to be costly and difficult and parts will be changed, he said, but there’s still a business to run.

“When it’s all said and done, everybody has to try and make the best out of this,” he said, “because the alternative is not any better.”

 

mshedden@tampatrib.com

(813) 259-7365

Twitter: @MaryShedden

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