Business owners across the country sighed in relief when the Obama administration delayed for a year a plan to fine large employers who do not provide health insurance for their full-time workers.
But area employers and business groups say they are still unsure how the federal health-care reform law will affect companies in the long term, and they are stuck in a holding pattern until they have a better idea of how complying with its employer mandate will impact their bottom lines.
Bill Goodwin, president of Griffith Electric Supply Co. Inc. in Trenton, said he has hired a broker to help him determine what, exactly, the Affordable Care Act will mean for his business, and how much it would cost to provide health insurance to his 52 employees.
Because Griffith has just more than 50 workers, it is considered a large employer subject to the law’s requirements.
“The government has created a lot of extra work for employers,” Goodwin said.
Goodwin and other area business owners are seeking advice about what to do even though the effective deadline for complying has been pushed back to 2015. The mandate for businesses to offer health insurance will still go into effect in January, but the federal government said in July that enforcement was being postponed.
Goodwin said health care is his company’s second-largest expense, after salaries, and eats up about 10 percent of revenues each year.
“We know it is needed and we don’t want to not cover our employees,” Goodwin said. “It’s getting to the point where we can just not afford it.”
Business leaders and insurance brokers said many business owners are finding themselves in Goodwin’s position.
Philip Kirschner, president of the New Jersey Business and Industry Association, said some employers he has spoken to are holding off on hiring their 50th full-time employee so they will not be considered a large business under the law.
By continuing to be considered small businesses, they will be exempt from penalties for not offering insurance.
As an incentive to provide coverage despite the exemption, they will have access to the Small Business Health Options Program, which pools risk so they can access lower-priced plans. Some businesses may qualify for tax credits to cover the cost of premiums.
HIRING DILEMMA
As they weigh whether to hire that 50th full-timer, Kirschner said businesses are weighing the additional revenue they will earn through increasing their headcount versus the cost of providing their workers with insurance.
“They just don’t know what to do, and if that is going to be more expensive than what one person would do as far as revenue,” he said.
Robert Prunetti, president of the Mid Jersey Chamber of Commerce, said he has talked to a slew of business owners who have been struggling to learn what they will need to do without having yet seen the health plans that will be available.
The federal Health Insurance Marketplace does not open until Oct. 1.
“They all need to learn more,” he said. “They are going to their accountants, to their attorneys, to whomever to try to figure out what this really means and the best way to comply.”
“It will become clearer,” Kirschner said.
“I don’t know if it will be clearer in a good way or a bad way, but we will have experience soon. Now we just have fear and uncertainty.”
Some employers also are considering cutting employees’ hours to an average of less than 30 hours a week so they will be considered part time, Prunetti said.
The law does not require businesses to provide insurance for part-timers.
The Hamilton and Robbinsville school districts have notified substitute teachers they may no longer work more than four days a week so they can be classified as part-time employees and not have to be offered health insurance.
Though the penalties will not go into effect for more than a year, the districts are cutting hours now so they are in compliance with the law, and to try out revamped teacher schedules so they are prepared when enforcement begins, Robbinsville Superintendent Steven Mayer said.
The mandate will affect a wide swath of businesses and other employers, but several business owners contacted for this article declined to comment when asked how they might have to adjust to comply with the law.
Prunetti said that, particularly in retail jobs, he is expecting to see employers keep a close eye on the number of hours their part-time employees are putting in.
WAITING FOR THE MARKETPLACE
Dave Fried, mayor of Robbinsville and CEO of Tricore, a company that provides human resources services to small- and mid-sized businesses, said his clients are putting off making final decisions about what kind of insurance plans to offer until they have a better idea of what to expect from the Health Insurance Marketplace, and a better understanding of what is required of them.
“A lot of people are putting off making a final decision because the fine hasn’t been put into effect,” Fried said.
Some of the nonprofits that Tricore consults for may have to cut back on their mission to cover health-care costs, said Fried, a Republican.
No matter what size their business, owners are leery of making choices about health care before seeing what the marketplace looks like, said Bill Rue Jr., president of Rue Insurance in Hamilton.
Rue said companies that employ lower-paid workers, such as construction or seasonal workers, are asking if their employees would be able to get a better health-care plan than what the business could offer, and at a lower price, in the marketplace. Until the marketplace opens next month it is difficult to advise them, he said.
“The frustration for most employers is the uncertainty,” Rue said. “There is still a question mark as ... the final detail of what the prices are going to look like.”
The Princeton Regional Chamber of Commerce will try to address questions about the Affordable Care Act during a health-care symposium on Sept. 24 at Mercer County Community College in West Windsor. The NJBIA also will have a seminar on the law on Oct. 30 in Edison.
Contact Jenna Pizzi at jpizzi@njtimes.com or (609) 989-5717.
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