Small business on Obamacare: ‘We need to know what the laws are’
MANCHESTER — Her official title is comptroller, but Doreen J. Demone handles a lot of things for Naults Motorcycles, with locations in Manchester and Windham. One of those things is health insurance for the company’s employees. With a full-time headcount “a hair under” 50 workers, according to Demone, Naults is right on the borderline when it comes to the mandates large employers face under the Affordable Care Act.
“We should be OK,” she said, “but we need to know what the laws are.”
That’s why Demone was among 300 representatives of small businesses, attorneys, health insurance providers and a host of others on hand for a Thursday morning seminar at Southern New Hampshire University on the impact of Obamacare on small businesses.
Like many of the businesses represented at the event, Naults offers health insurance to its employees and that’s not likely to change as major provisions of the ACA take effect in 2014.
“The little bit of research that we’ve done shows it’s more likely than not that large employers are going to continue to provide coverage because that’s how large employers compete for good employees,” said N.H. Insurance Commissioner Roger Sevigny, one of the presenters.
Tom Boucher, CEO and owner of Great NH Restaurants, reinforced that message as he described the steps his company is taking to deal with the ACA, which poses particular challenges to the restaurant industry.
“We’ve got to pay attention to this. It’s right on our doorstep,” he said. “This is absolutely the most challenging piece of legislation to hit our industry in the history of our industry.”
Analyzing the problem
Great NH Restaurants, which includes Copper Door, T-Bones and Cactus Jacks locations, employs 500 full- and part-time workers, he said, but only 155 have been covered by company-funded health insurance.
The company identified another 109 employees who could become eligible under the ACA’s employer mandate when it takes effect in 2015. But Boucher and his managers couldn’t be sure what those 109 employees would do. Were they planning to go on a spouse’s plan or a parent’s plan? Would they rather pay an IRS penalty, which in the first year is less than $100, or would they take the company plan?
A mailed survey yielded only a 10 percent response, so Boucher asked his general managers to survey employees one-on-one, which led to the conclusion that 79 would potentially seek company-funded coverage. The company estimated that of those 79, two-thirds would follow through, meaning the company had to budget for 53 new policyholders — a cost of $100,000.
Those employees would have to figure out how to come up with their 50 percent of annual premiums, equal to about $2,000. The company had to figure out how to come up with its share.
It was a difficult exercise, but one many businesses are facing, Boucher said, particularly in the restaurant, retail and grocery sectors, where profit margins are low but employee counts are high.
To come up with the $100,000, he said the company considered cuts in benefits to managers, eliminating bonus pay and longevity incentives or reducing hours to create more part-timers not eligible for coverage.
“Our average servers work between 32 and 33 hours a week,” he said, “so it wouldn’t be that much to push them down to under 30 hours and just hire more people.”
The ‘fifth option’
Instead, Boucher said the company came up with what he called a fifth option.
“We think this is the right investment in our companies and our employees’ future,” he said. “We made the decision about a year ago to embrace this opportunity to become the employer of choice in the restaurant industry. We are not going to cut benefits or hours.”
Boucher said some small price increases over what would ordinarily take place each year, along with some small cuts in operating expenses such as marketing, will get the company the money it needs to comply with the law.
Other speakers at the seminar, hosted by Northeast Delta Dental, included representatives of the Small Business Administration, the N.H. Insurance Department, Anthem Blue Cross and Blue Shield and Harvard Pilgrim Health Care.
William Graham, senior vice president at Harvard Pilgrim, said his company would be joining Anthem in offering plans through the online exchange known as the N.H. Marketplace, but not in 2014.
“We will eventually participate in the Marketplace here in New Hampshire,” he said. “It’s not a question of if, it’s a question of when. It will likely be in 2015 or 2016. That’s still being worked out.”