The Affordable Health Care Act & Restaurants: What To Expect

Today is the big day – the day the Supreme Court begins hearings on the constitutionality of the Affordable Health Care Act, aka Obamacare.

Many want to see the whole thing repealed, many want to see the whole thing left intact, and most aren’t really all that sure what the whole thing entails besides an individual mandate to carry health insurance.

Regardless of your personal feelings about the legislation, as a restaurateur you are more than likely a small business owner, and as a small business owner you need to understand exactly what’s in store for you in the next couple years, provided the Affordable Health Care Act remains on the books in some form.

What You Need To Know:

The Mandate

The Law:
If you are a business with at least 50 full time employees then you will be required to provide “minimum essential coverage” beginning in 2014 or pay a fine.  Part time employees do not count towards the 50 employee limit and businesses never have to provide minimum coverage to part time employees.

Pro: 50 employees may be an easy threshold to reach but restaurants especially have many part-time employees, making the “mandate” as it were a fairly high threshold to reach for most independent restaurants.

Con:  This mandate puts an unfair burden on businesses with 50 full time employees or more.  It may be cheaper for those businesses to just pay the fine, which means a de facto tax on “medium” sized businesses.

Tax Credits

The Law:
You already qualify for a 35% tax credit on your business’ healthcare premiums if your business has less than 25 employees and their average annual salary is less than $50,000/year.  This tax credit is good between 2010 and 2013; in 2014 the credit increases to 50% for two years.  These businesses must purchase insurance through newly created Exchanges to qualify; the Exchanges are meant to control premium costs and standardize benefits across all insurers.  More info.

Pro: The credit eases the burden on small businesses as they transition to the new Exchange insurance program.

Con:  The tax credit doesn’t offset enough cost or last long enough and not enough businesses qualify.  More info.

Insurance Exchanges

The Law:
New insurance exchanges require insurers to provide insurance for everyone in an employer’s group regardless of health status or preexisting conditions.  These insurance plans are price controlled and have a standardized benefits package.

Pro:  Small businesses will get some form of insurance, no matter what.  The Exchanges also bring premiums down and allow small businesses to enjoy the purchasing power benefits enjoyed by larger companies.

Con:  Insurance Exchanges don’t make the cost of providing health care to employees who did not get health care from their employer in the past any easier to bear.  Either that or pay a fine – both are an increasing cost.

The new law is complicated, to be sure.  And it’s immediate repudiation by the Republican Party makes its future uncertain at best.  In the meantime, however, the provisions of the Affordable Health Care Act continue to phase in, and as they say, knowing is half the battle.

Also, check out the NRA’s Health Care Knowledge Center for more resources pertaining to restaurants.