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.