WSJ: Small businesses increasingly looking to avoid the employer mandate

posted at 4:41 pm on April 8, 2013 by Erika Johnsen

All of the uncertainty over ObamaCare’s increasingly messy implementation hasn’t exactly been doing many favors for the small-business community. The, ahem, Affordable Care Act requires all employers with 50 or more workers to provide health coverage for employees who work 30+ hours/week, or else pay a penalty of $2,000 per worker over a 30-worker threshold; the WSJ reports that, in the face of rising costs, employers are increasingly looking for ways to avoid the employer mandate, even if it means opting out of the requirement and paying the fine instead in some cases:

Mr. Levi currently spends about $140,000 a year on insurance premiums to cover 25 managerial staff at his business, Consolidated Management, which runs cafeterias at schools, offices and jails.

Under the new law, he will have to offer insurance to all of his 102 full-time employees starting in January. Assuming all of them take the coverage, Mr. Levi says the cost of premiums could exceed $500,000. …

He says it makes more sense to drop insurance entirely and pay a penalty of about $144,000. …

Nearly half, or 46% of 889 small-business owners surveyed by The Wall Street Journal and Vistage International say they don’t know if providing health insurance will be more or less costly than facing penalties. More than three quarters, or 77%, polled online from March 11 to March 20, expect their health-care plans to cost more next year under the health-care law.

To avoid the employer mandate, some small firms are considering other strategies, such as increasing employees’ share of the premiums, so they don’t have to shoulder the entire cost of offering benefits. Others say they will stay under the 50 full-time employee threshold or deliberately turn full-time workers into part-timers.

According to a survey from the National Small Business Association in February, most small-business employers are still holding off on taking the penalty route, but the mere fact that nearly half of small-business owners still don’t know whether doing so will be more or less costly hardly bodes well for hiring and investment. Remember that the Obama administration recently decided to delay on the Small Business Health Options program, which would have set up exchanges specifically geared toward small businesses to help them shop around for their best options — it was a big ObamaCare selling point, now morphed into an apt demonstration of the ways in which the administration got maybe just a little ahead of themselves.

Hem, hem:


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We have Obama and the Russians have the Putin. We are so screwed. Check out the (NSFW?) video of Putin being rushed by topless protestors. Watch his response when he sees the boobies come bouncing his way.

P.S. I know it’s OT but it was too funny not to share.

DFCtomm on April 8, 2013 at 4:46 PM

Assuming all of them take the coverage, Mr. Levi says the cost of premiums could exceed $500,000. …

He says it makes more sense to drop insurance entirely and pay a penalty of about $144,000. …

Intentional. Get the workers to clamor for single-payer.

rbj on April 8, 2013 at 4:47 PM

Small racist businesses…

Akzed on April 8, 2013 at 4:48 PM

Others say they will stay under the 50 full-time employee threshold or deliberately turn full-time workers into part-timers.

They obviously don’t understand the word “free”.

But yah, this was the plan from the beginning, crush everyone everywhere under the burdens of a horrifyingly bad, cobbled-together scheme created by liberal jackasses, and move on down the road to single payer.

Bishop on April 8, 2013 at 4:49 PM

There will be no real way around it, for as long as it exists. The small business owners might be able to dance around the intricacies of the law, or lack thereof, for a while. But, in the end, they – as they did from the start – will use force in order to have their compliance.

For the Left, it’s always about force, and they will have obedience through it.

OhEssYouCowboys on April 8, 2013 at 4:50 PM

If bayam brings up France, Germany, medical technology investment or Larry Ellison – everyone drinks.

Chuck Schick on April 8, 2013 at 4:51 PM

Just imagine how many more Americans would be working today, if businesses across the country didn’t have such a strong incentive to keep the number of their employees below 50.

wren on April 8, 2013 at 4:54 PM

The entire premise of the health care debacle was driven by the constant refrain that 45,000 Americans a year are dying from the lack of health insurance and where are those headlines now?

fourdeucer on April 8, 2013 at 4:55 PM

But yah, this was the plan from the beginning, crush everyone everywhere under the burdens of a horrifyingly bad, cobbled-together scheme created by liberal jackasses, and move on down the road to single payer.

Bishop on April 8, 2013 at 4:49 PM

They may have backfired with this one, though. Opposition to it should have declined by now, but isn’t. It will be hard for the Democrats to get single payer given how badly they screwed up Obamacare.

If they wanted to crash the system intelligently, they should have made sure that Obamacare actually delivered something tangible that was simply too expensive to maintain, rather than passing a law that essentially stripped away millions of peoples’ healthcare away while delivering little to no new service.

Doomberg on April 8, 2013 at 4:58 PM

Just imagine how many more Americans would be working today, if businesses across the country didn’t have such a strong incentive to keep the number of their employees below 50.

wren on April 8, 2013 at 4:54 PM

“I think at some point, you’ve hired enough workers.” – President Obama

Doughboy on April 8, 2013 at 5:04 PM

It’s over. The Going Galt movement is in full power mode. The “dropouts” from the labor force aren’t in suspended animation – they’re off the grid, doing their thing for cash or barter, and generally keeping a low profile.

What they aren’t doing is paying to fund this lunacy. And their ranks are growing.

So many are out of the workforce that the debt/deficit cannot be overcome. Even if the economy started growing at 4%, they would not come back in. The fed has broken the system. Hope they’re happy.

That’s why they are pushing immigration reform. They want the illegals registered and contracted to pay taxes owed; then they close the window and everybody else is now a tax criminal.

That includes the Galt people, who haven’t been paying taxes, which gives the IRS authority to confiscate wealth and bring charges against them. Citizenship will not matter – paying taxes will be the only issue.

They are very clever – these leftist traitors. Pretend it’s about the 12 million illegal aliens when it’s really about the libertarians and the tea party.

And the elite GOP band plays on. Because sucking up and grovelling is what they do.

Palin/Root 2016 is our only hope.

platypus on April 8, 2013 at 5:14 PM

If bayam brings up France, Germany, medical technology investment or Larry Ellison – everyone drinks.

Chuck Schick on April 8, 2013 at 4:51 PM

…I don’t have a designated driver!

KOOLAID2 on April 8, 2013 at 5:18 PM

Small businesses increasingly looking to avoid the employer mandate

Er, yeeeaaah, d’ncha see the less than 90K jobs figure last week?

socalcon on April 8, 2013 at 5:18 PM

Hey! If you like your insurance, you can keep your insurance. If you like your doctor, you can keep your doctor.

Barry said so.

And Barry always knows what he’s talking about.

Just like with all those “shovel ready jobs”.

GarandFan on April 8, 2013 at 5:19 PM

They currently spend $140,000 on insurance premiums.
If they cover everyone they spend $500,000 on premiums.
If they pay the fine, they pay $144,000 and don’t cover anyone

Take these numbers and pretend it was a manufacturer instead of janitorial services (it is an apt comparison since the costs per person will be roughly the same).

Imagine a manufacturer having to pay nearly $400,000/year additional if he choses to cover his employees or spend $4,000 more a year not covering anyone.

You get one of two results.

1. The company covers their employees and can’t compete in the market due to lower priced imports, has to cut employees to remain competitive.

2. The company doesn’t cover any of the employees and the workers have to pay for their own coverage instead of consumer spending on durable goods.

While this problem is bad for service employers such as Mr. Levi, it is the nail in the coffin for small-business manufacturers in our country.

We may be one of the most productive manufacturing workforces in the entire world, but thanks to our government it does not equate to being the lowest cost. American consumers in aggregate will always go with lower priced goods.

weaselyone on April 8, 2013 at 5:23 PM

This is all part of the plan. Provide incentives for employers to boot their employees off of insurance or reduce them to part-time status, and there will be a nice government-provided Obamacare plan there to pick them up.

The left will blame business, both small and large, for being greedy and the myriad of problems inherent in Obamacare will be an excuse for More Government.

TarheelBen on April 8, 2013 at 5:24 PM

Small businesses that must provide insurance are also, on paper, splitting one company into several and placing less than 50 employees under each new corporation to beat the mandate. If they can’t do that, then they will bump down employees to part-time status. That’s great for growth (sarcasm).

This is going to part-time nation by 2014. Stockpile food. And when we do, the government will begin buying it all.

Philly on April 8, 2013 at 5:25 PM

the unemployment #’s are the tip of the iceberg. They certainly won’t improve when Owebama care officially starts. Small biz are either going to have to lay people off or make a percentage of their employees “part time”.

Minnfidel on April 8, 2013 at 5:26 PM

i bet obama would rather get the penalty as pure tax then have ppl sign up for healthcare and like every other tax it will soon be raised or cola’d or something.

sux don’t it.

losarkos on April 8, 2013 at 5:30 PM

At least we are doing better than kenya and cuba. we are setting the bar pretty high these days.

acyl72 on April 8, 2013 at 5:31 PM

Businesses transfering employees to the government system is the whole idea. Obamacare is designed to destroy what’s left of the private insurance/healthcare industry so that government single payer is the only option left.

All is proceeding according to plan.

jnelchef on April 8, 2013 at 5:33 PM

Businesses transfering employees to the government system is the whole idea. Obamacare is designed to destroy what’s left of the private insurance/healthcare industry so that government single payer is the only option left.

All is proceeding according to plan.

jnelchef on April 8, 2013 at 5:33 PM

The math doesn’t work though.

They charge an employer 2,000 for not covering someone. Even a single person is going to have to pay 10-15,000 to find coverage for themself or the government is going to have to pick up the difference.

We get less money in the pocket of the consumer to help the economy. We get the government spending even more than what they take in.

This is really really bad. There is not a scenario that I can see that makes this work.

weaselyone on April 8, 2013 at 5:37 PM

Just as they passed ObamaCare with limited discussion (Nancy Piglosi: We have to pass the bill to find out what’s in it), they are planning the same tactic with comprehensive immigration reform. zthe outcome will be far worse. ObamaCare can be undone; amnesty cannot.

bw222 on April 8, 2013 at 5:46 PM

Is it wrong to hope that when this sebilius thing is discarded like yesterday’s trash by this regime she ends up in some Kansas nursing home dying a slow and protracted death while she waits 6 months for a basic diagnostic test or a caregiver that speaks English?

acyl72 on April 8, 2013 at 5:50 PM

This is really really bad. There is not a scenario that I can see that makes this work.

weaselyone on April 8, 2013 at 5:37 PM

That’s the point. Most people will end up paying the penalty and getting shoved into the government exchange, or at least that’s the way I think it’s suppose to work. I would say it’s single payer, but it’s better. They get the two tiered system they always wanted. A quality one for the elite, and a crappy one for the peasants.

DFCtomm on April 8, 2013 at 5:57 PM

The exchanges are nowhere near ready. And with the timelines built into the law, enrollment for much of RatEaredDevilcare has to happen in October for a January start. At what point does the filthy bastard, or more likely the cow at HHS stand in front of a microphone and admit that the implementation is not going well?

Happy Nomad on April 8, 2013 at 6:05 PM

Is it wrong to hope that when this sebilius thing is discarded like yesterday’s trash by this regime she ends up in some Kansas nursing home dying a slow and protracted death while she waits 6 months for a basic diagnostic test or a caregiver that speaks English?

acyl72 on April 8, 2013 at 5:50 PM

Yes acyl72, that would be wrong. Only the elites will end up in a nursing home dying a slow protracted death. I want Sebilius to end up dying in some gutter like the sewer rat she is.

Happy Nomad on April 8, 2013 at 6:08 PM

The math doesn’t work though.

They charge an employer 2,000 for not covering someone. Even a single person is going to have to pay 10-15,000 to find coverage for themself or the government is going to have to pick up the difference.

We get less money in the pocket of the consumer to help the economy. We get the government spending even more than what they take in.

This is really really bad. There is not a scenario that I can see that makes this work.

weaselyone on April 8, 2013 at 5:37 PM

My understanding is that accepting the penalty is a trap. It looks cheap in the first year but the penalty increases every year. By the time you’re a few years out, it might have been cheaper to buy the insurance.

trigon on April 8, 2013 at 6:37 PM

as a small business owner, all i can say is that every day firms are coming up with new and creative solutions to this problem.

I have no doubt the free market will figure a way to deliver good product to those businesses within the law that make sense to the bottom line.

I don’t believe the governmental bureaucracy can out think the free market, as long as they allow some semblance of the market to survive.

phillypolitics on April 8, 2013 at 8:30 PM

Small businesses that must provide insurance are also, on paper, splitting one company into several and placing less than 50 employees under each new corporation to beat the mandate. If they can’t do that, then they will bump down employees to part-time status. That’s great for growth (sarcasm).

This is going to part-time nation by 2014. Stockpile food. And when we do, the government will begin buying it all.

Philly on April 8, 2013 at 5:25 PM

There is actually a provision which prevents that. I checked with my accountant, who checked with his attorney.

stvnscott on April 8, 2013 at 8:37 PM

Of course, saving by paying a penalty is only a temporary respite.

How hard would it be for congress to raise the penalty to the point where the cheaper alternative would be to pay the employer mandate?

The camel’s nose is already in the tent (can I say that?).

BLOC on April 8, 2013 at 8:56 PM

stvnscott on April 8, 2013 at 8:37 PM

Here come the layoffs.

Philly on April 8, 2013 at 9:17 PM