Small Employers Weigh Impact of Providing Health Insurance
Like many franchisees, Robert U. Mayfield, who owns five Dairy Queens in and around Austin, Tex., is always eager to expand and — no surprise — has had his eyes on opening a sixth DQ. But he said concerns about the new federal health care law had persuaded him to hold off.
“I’m scared to death of it,” he said. “I’m one of the ones sitting on the sidelines to see what’s really going to happen.”
Mr. Mayfield, who has 99 employees, said he was worried he would face penalties of $40,000 or more because he did not offer health insurance to many of his full-time workers — generally defined as those working an average of 30 hours a week or more. Ever since the law was enacted in 2010, opponents have argued that employers who were forced to offer health insurance would lay off workers or shift more people to part-time status to compensate for the additional cost. Those claims have drawn considerable attention — and considerable anger in response — in recent weeks.
John H. Schnatter, the chief executive of Papa John’s, the pizza chain, said some franchisees were likely to reduce their employees’ hours to avoid having to provide coverage. And an unhappy Denny’s franchise owner in Florida warned that he would raise prices 5 percent as a “surcharge,” adding that disgruntled customers could offset that by reducing their tips.
Employers — often with a mixture of impatience and confusion — are waiting for the Obama administration to issue final rules on some of the law’s crucial aspects, like how the government determines whether an employee meets the 30-hour threshold, given the large numbers of seasonal and part-time workers with varying hours. Similarly, the precise level of coverage an employer must provide has not yet been clearly defined.
“If you can tell me what Obamacare is, then I can tell you how much it’s going to affect me,” said Bob Bellagamba, who runs Concorde Limousine, a service with 75 employees, in Freehold, N.J. “All the reading I’ve done on this, and there are so many things that are not determined. There is no clarity to the guidelines.”