Deciphering Health-Care Reform
WASHINGTON — With its more than 2,400 pages, the recently enacted health-care reform law is chockfull with immediate ramifications and long-term ambiguities for large and small business owners.
Small businesses with fewer than 50 employees are mostly off the hook from being required to provide coverage to their workers. Businesses with more than 50 employees that do not offer health care will be taxed based on the size of their payrolls.
Many of the provisions that apply to small businesses won’t take effect until state-based insurance exchanges — the centerpiece of the law — roll out in 2014. These state exchanges are envisioned to allow small businesses and the self-employed to join buying pools in order to reduce premiums.
Still, due to economic factors and the contentious political climate, the framework of state exchanges will evolve during the next few years, according to John Chwat, director of government relations for the Electronic Security Association (ESA, formerly NBFAA).
“We have absolutely no idea right now what the states are going to require and what the costs are going to be,” Chwat says.
Once state exchanges allow small businesses to buy insurance, businesses with 10 or fewer full-time employees who earn less than $25,000 will be eligible for a tax credit equal to 35 percent of the premium’s cost, according to the Small Business Administration (SBA). By 2014, the tax credit increases to 50 percent for businesses with 10 or fewer employees with wages below $25,000.
Tom Courtney, proprietor of Anaheim, Calif.-based Beacon Security, who already provides health insurance for his six employees, says he has no plans to participate in any healthcare reform options.
“I am so turned off by the health care package. It is so complex, I don’t even intend to get into it,” Courtney says. “Even if I were entitled to a tax credit of some type I would choose not to participate because of the paperwork that is involved.”
By 2014, companies with fewer than 50 employees will be exempt from the requirement to offer health care. Employers with more than 50 workers will be responsible for covering at least 60 percent of workers’ health care costs by 2014. Failure to do so could result in a $750 fine per worker, and up to $2,000 per worker each year in tax fees. (According to SSI’s 2009 Installation Business Report, security contractors on average staff 14 full-time employees.)
Chwat, like many critics of the legislation, says some business owners may be discouraged from adding full-time employees, electing instead to remain below a 50-employee payroll.
“If I’m an employer and I don’t want to hit that threshold of 50, I will either fire people or I will hire part-timers to keep it at 49,” he says. “What does that say to increase business operation planning for the next two or three years? It will retard it unless the business owner is willing to pay for it.”
For companies employing 200 or more people, the new law will require that employees be automatically enrolled in health coverage.
Stanley Oppenheim, president of New York City-based Affiliated Central and DGA Security Systems, views health-care reform as a positive. “Insofar as negative implications for my [companies], I don’t see them because A., I believe in providing health care for my  employees; and B., now all my competitors will also have to provide health care — and that evens the playing field.”
According to SSI’s 2010 industry demographic census (see the March issue), 75 percent of installing systems businesses in North America provide some form of employee health insurance.
John Jennings, CEO of Scottsdale, Ariz.-based Safeguard Security and Communications, spends roughly $90,000 per month to fund health savings accounts (HSAs) for his 350 employees. In an attempt to stem skyrocketing costs, Jennings recently instituted an incentive program to provide cash bonuses to employees who quit smoking and make other lifestyle changes.
The program was born from a necessity to proactively protect the company’s own well-being, since bureaucratic fixes have been nonexistent, Jennings says.
For now, Jennings is watching the new law from a distance. “I’m not going to worry about it for the time being. There is going to be a lot of amendments, a lot of changes,” he says. “We hope this is something that is going to help prices come down eventually, but we’ll have to wait and see.”
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