BY MATT WIEBE
WASHINGTON, D.C.—Headlines kept the health care debate front and center for months, but in spite of political posturing its passage should have little immediate impact on small retail stores or businesses.
The bill itself, HR 3590 and HR 4872, exempts companies with fewer than 50 employees from providing health care or paying penalties. Some estimates point out the exemption covers up to 96 percent of all businesses in the U.S.
While small employers aren’t legally bound to provide healthcare, those that do could earn some tax credits.
From 2010 through 2013—before the creation of health insurance exchanges—a very small business could receive a tax credit to offset 35 percent of its insurance costs, provided the business contributes at least half of the premium, according to New York Times analysis.
Then, once the business begins buying insurance through an exchange, the credit increases to 50 percent and is available for any two consecutive years. The full credit is available to businesses with the equivalent of 10 or fewer full-time workers paid, on average, less than $25,000. It phases out as the payroll, excluding seasonal workers, grows to 25 and wages rise to $50,000, the analysis found.
Many other details will be worked out over the next six months as the Administration writes regulations to implement the bill’s requirements. But in the short term, the bill itself doesn’t ratchet down the current cost of health care premiums.
“We haven’t been able to afford health care for our employees and there’s nothing in this bill that makes health care more affordable,” said Mikki Griffin, who, with her husband Allen, own Perpetual Motion Bicycles in Carrollton, Georgia.
Griffin has three full-time employees and two part-timers. As the shop’s health care costs climbed, they switched to self-coverage through a savings account, which they administer. “I want to be able to buy health care coverage for my staff, but I’m still priced out of the market,” she added.
The six-store Bike Gallery chain in Portland, Oregon, is well over the 50-employee threshold, employing 90 people full time with another 60 part-timers hired during the peak season. Yet the company’s controller Craig Thompsen sees little impact on its current health coverage. Bike Gallery already pays 80 percent of health care costs for full-time employees, well above the bill’s mandate of 50 percent.
“It’s really hard to know the impact of the bill given its size. Plus, its impact is still years off. But one area I see that could affect us is the health care requirement for our part-time seasonal employees,” Thompsen said.
According to the National Bicycle Dealer Association’s (NBDA) Cost of Doing Business Survey, of the 400 shops that responded, 152 shops provide health insurance to their full-time employees, and 33 shops provide dental insurance.
Of shops doing $2 million or more, 87 percent provide health insurance to full-time employees and 27 percent provide dental. For shops doing between $300,000 and $500,000, 32 percent provided health insurance and 5 percent provide dental.
“With the 50 employee threshold, the bill will not impact most bike shops, but from our cost of business survey you can see quite a few shops offer health care anyway,” said Fred Clements, NBDA’s executive director.
“Many shops offer it for competitive reasons; they are competing for employees with other employers. A shop’s ability to provide health care benefits is a draw for employees, but its growing cost is a major concern,” he added.
The NBDA once offered shops a group health plan, but dropped it 15 years ago because owners could get as good or a better rate from local providers.
Health care costs of businesses Bicycle Retailer spoke with reported annual increases of 16 to 20 percent, and nothing suggests these increases will lessen as a result of the bill.
“My biggest concern is that my annual increase will go up. I don’t know that it will, but I’ll be watching,” said Angie Pioquinto, accounts manager at Helen’s Cycles in Santa Monica, California. Helen’s employs about 50 people.
One of the bill’s requirements is that employers extend coverage for employee dependents up to the age of 26. While some may offer health care for dependents, most small businesses require that dependents pay the full cost of being on the policy. Consequently few sign up for employer-provided plans.
Quality Bicycle Products is one of the industry’s larger employers with up to 500 full and part-time employees. It found its health care costs climbing so quickly, it opted to self-fund its health care. The company and its employees pay into the health care fund and money is pulled out as needed. QBP pays a health care provider to administer the program. Since the insurance company is paying out QBP’s money not its own, the annual fee is much less.
“So far it’s working great and has allowed us to control costs. We still carry insurance to cover us if we run out of money in the fund because of catastrophic claims, but overall it’s saving us money,” said Bess Simon, QBP’s human resources manager.