The Affordable Care Act's effects on business
The Affordable Care Act has been raising some eyebrows in the business community across the country. So what are the effects on businesses -- small, and not so small -- and what changes are in store for our country's workers?
We spoke with insurance broker Beth Larchus, who works closely with businesses to help them find coverage and has actually worked for a health care company in the past. Larchus says she has taken hours of classes on the Affordable Care Act and she still has questions.
According to the The U.S. Small Business Administration, depending on how many employees you have, the Affordable Care Act will affect you differently.
For example, grocery chain Food City, and its parent company K-VAT, employs 13,000 people. The chain operates stores in Tennessee, Virginia, North Carolina and Kentucky. More than half of the company's workers are part-timers who help cover a small window of time when the bulk of Food City's customers flood the stores. "We do 60 percent of our total volume between Friday afternoon and Sunday evenings. So if you think about that, the other days, the weekdays, are very slow and the weekends are very busy," said Food City President and CEO Steve Smith.
Under the Affordable Care Act, or ACA, Food City -- because it has more than 50 workers --- is required to offer health care to all full-time employees. The new definition of full-time, according to the ACA, is someone who workers 30 hours a week or more. If companies like Food City do not offer full-time workers health care, they must pay a $2,000 fine per person, per year.
That mandate has been delayed until January of 2015, but for many companies across the country, the wheels were already in motion; they are going forward with making the changes now.
For Food City, that means part-timers can now only work up to 28 hours a week. "We've had to reduce those folks' hours, at no fault of their own. They are good associates and do a great job for us," said Smith.
Smith said this is an unintended consequence of the Affordable Care Act that he regrets, but as a company that operates on just a one-percent profit margin, providing healthcare for his 7,800 part-timers was just not a viable option.
Businesses across the country have had to make the same move including retailers, fast food restaurants and even community colleges. Matt Stanley, 21, is directly affected by hour cuts; he began working part-time for a lawn care company after his hours at a restaurant were slashed to 29 in order to help his employer comply with the 30-hour requirement. "I was actually living in an apartment with my buddies and that's when we started getting our hours cut," said Stanley, who is saving for college. He said his hours and income were reduced significantly, so much so that he moved back in with his parents and landed a second job.
"Working seven days a week you don't really have much of a life to do anything. You're always working or trying to go to bed to be up early the next day, and [going to] school at night," said Stanley. "It gets tough sometimes."
As for companies with fewer than 50 employees, like Berry's Pharmacy in Kingsport, Tennessee, the ACA does not require them to provide full-timers -- those working 30 hours or more -- with health care. Owner David Berry has 22 workers. As a pharmacist, his concerns about the Affordable Care Act are related to reimbursement rates.
We talked to a spokesperson with the National Community Pharmacists Association in Alexandria, Virginia who confirms that government reimbursement levels, through programs like Medicare, are already down.
Berry says he's even losing money on some prescriptions, which has him wondering if he'll even survive as a hometown pharmacist. Right now, Berry has many unanswered questions about the ACA. "Like any other business, we have to plan ahead. It's not very long to the first of the year," he said.
Pharmacist Emily Holley understands the concerns of her employer and other small businesses; however, as someone born with a heart defect, she says she's grateful for the Affordable Care Act. Before the law, Holley could only get coverage for her pre-existing condition by working for a large employer that could absorb the costs. Now the ACA allows her on the rolls, even while working at a 'mom & pop' operation she loves. "When I came out of school and really wanted to do independent, or even have my own pharmacy one day, but I didn't really consider it an option," said Holley. "So what the Affordable Care Act has done is make that possible."
Experts say there's another potential benefit for a business of this size -- if they sign on to the ACA's Exchange, also known as "Marketplace." "Employers that have 25 or fewer employees, if they go on the Marketplace, they possibly qualify for a tax credit," said insurance broker Beth Larchus. Larchus, who works with the Cambron Insurance Agency in Johnson City, deals specifically with businesses and their health care programs. She says older workers, especially those over 60, may also benefit.
Here's why: the Affordable Care Act offers subsidies for some seniors who qualify. The ACA also limits age-banding, which is the common practice of insurers charging older people more than younger ones.
If you want more facts about how the Affordable Care Act will affect businesses and workers, including seniors, please visit the following websites:
Small Business Administration: http://www.sba.gov/healthcare
Job Creators Alliance: http://jcnf.org
Now the premiums for older workers cannot be more than three times what they are for younger people. The change is likely going to mean more costs for young people. "The younger people are going to have to subsidize all that and pay for it," said Larchus.
If your company provides a plan that offers extensive coverage, starting in 2018 your employer will pay a 40 percent excise tax for exceeding a certain threshold for benefits, and experts believe the costs will inevitably be passed on to the workers. Some companies, like Trader Joe's and Home Depot, have stated they will stop providing any medical coverage for part-time employees, sending them to the public health care Marketplace instead.
The Affordable Care Act also places new taxes on health insurance companies. All of the experts we spoke with, on and off camera, say those costs will no doubt be passed along in our premiums.
Because there are still a lot of unknowns about the ACA and its effects right now, experts say the best thing we can do at this point is to arm ourselves with information.