So, what exactly are small business owners facing when the Affordable Care Act aka ObmaCare is fully implemented in 2014? Contrary to what you might have heard, businesses aren't locked into the law as far as having to provide health coverage for their employees. Unfortunately, the campaign rhetoric by the President that if you liked your current health care plan, you could keep it, didn't quite fully register with many small business owners.
From the Wall Street Journal:
Small-business owners across the U.S. are bracing for the health-care law that kicks in next year, fearing it will increase the cost of providing insurance to employees.
But Rick Levi, a business owner in Des Moines, Iowa, is among those considering the government's escape hatch: paying a penalty to avoid the law's "employer mandate."
Under the Affordable Care Act, employers with 50 or more full-time workers will be required to provide coverage for employees who work an average of 30 or more hours a week in a given month. An alternative to that mandate is for business owners to pay a $2,000 penalty for each full-time worker over a 30-employee threshold.
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.
"I've never made a profit in any year of the company that has surpassed that amount," says Mr. Levi, 62 years old. "I don't make enough money."
He says it makes more sense to drop insurance entirely and pay a penalty of about $144,000.
For those of you in Placentia, California, that's a tidy little bump of at least $360,000 a year in order to provide healthcare for one's employees. Then again, why eat that cost when you can hit the easy button and just drop healthcare coverage for your employees and pay the penalty tax?
Back to the article:
Gary Epstein, owner of Firstaff Nursing Services Inc. in Bala Cynwyd, Pa., has similar plans. He intends to stop offering health insurance benefits at his home health-care company.
Mr. Epstein, 52, employs about 250 workers and currently provides health insurance to his 20 office personnel. If he were to start covering the 100 or so nurses and nursing assistants that work full time, his annual health-insurance costs would jump to roughly $600,000 from the current $100,000, he says.
Even if he takes the penalty option, he estimates he would have to pay about $240,000-a cost he doesn't think his business could absorb. To compensate, he plans to cut the number of hours his nurses and nursing assistants work so they will be considered part-time under the law. He says he will hire more part-timers to ensure patients receive the same level of care.
"We're going to do everything we can in order to stay in business," he says.
We don't know about you but relying increasingly on the temp labor market probably isn't a leading indicator of a robust economic recovery. But what was one to expect from the band of economic illiterates roaming the West Wing and large swaths of Capitol Hill? A 2,200 page law cobbled together by health industry lobbyists and legislators on the take that piled 30 million more people into the system and which mandated more healthcare coverage requirements and has certainly created confusion for both individuals and small business owners because of the byzantine nature in which the law was written... somehow this was supposed to drive down the cost of health care in this country?
Unfortunately, in the statist mindset, the actual effectiveness of an entitlement program such as ObamaCare runs a distant second to the fact that the law was actually passed. Good for the statists who championed and voted for the law and who won't suffer its consequences, bad for the rest of us.