NEW YORK (
) -- Just when business owners were getting used to President Obama's
, the government goes and changes the rules, leaving more uncertainty and stifling business growth.
Last week the
said it would delay the Patient Protection and Affordable Care Act's mandatory employer and insurer reporting requirements by one year to January 2015.
Treasury says after listening to concerns from businesses, it plans to "simplify the new reporting requirements consistent with the law." The postponement will also "provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees," it said in a July 2 release.
Small-business owners and franchisors have been scratching their heads since the law's passing in 2010 to figure out how it would affect them and how to implement a rather confusing set of regulations.
According to a Newtek Business Services' June small business survey, more than half of the 1,000 respondents said they didn't know how to prepare for the upcoming health care reform changes.
Of the remaining, 24% plan to reduce benefits to employees, while 13% plan to rebid their policy and 11% plan to reduce business expenses, the monthly survey found.
At the basic level, a year delay does give some breathing room, particularly to businesses that have never had to provide coverage before.
Bill Rue Jr., president of
, a fourth-generation family-owned insurance brokerage, says the delay is positive for small businesses, such as those that depend on seasonal hires.
"We've had some clients that are very relieved because they have employees that have never had coverage before that would now have to have coverage," Rue says. "There's more time to offer some guidance and figure this out, but again it's an example of federal government setting up something
that some states have opposing regulation and in the rush of trying to get this ready ... we have to put it on hold."
Sam Caucci, principal and founder of
, a sports sales consulting and training company, also says the delay is positive for small businesses.
While his company is below the 50-employee threshold with 14 employees, "any increase in their operating expenses is a direct effect on the money they spend on training," Caucci says. "It would definitely make us more sensitive to bring on staff."
But other small-business owners fear it's just a political ploy to get the mandate requirements out past the mid-term elections.
"All this does is underscore the lack of planning and the inability of the administration to set any kind of clear planning tools for the small businesses and that's why the economy will continue to chug along at an abysmal pace, because small-business owners like me and others can't really make any plans because what's up today is down tomorrow," says Ed Jerdonek, CEO of
, an architecture firm based in Louisville, Ky.
The controversial health care law, meant to provide more individuals with affordable health care, requires employers with 50 to 199 full-time workers to either provide health insurance or pay a tax penalty of $2,000 per employee (provided the employee gets subsidized insurance from the government), according to health insurance experts. Businesses with fewer than 50 employees are exempt from the ruling, but self-employed individuals will be required to purchase insurance, or else pay a tax of as much as 2.5% of household income.
Observers say the law also serves as a threat to small-business growth. Some small businesses that already provide coverage say the added costs of reporting and rise in health insurance premiums are a potential detriment to investment. For business owners with fewer than 50 employees, some are already holding back from hiring extra workers for fear of going over the 50-employee threshold.
Luckett & Fairley is an example of a company that already offers health insurance and benefits to its 80 employees, but The Affordable Care Act will impede on its ability to do small acquisitions it may have otherwise have made.
Instead it will be forced to "plow more money into employees' benefits," Jerdonek says. "Insurance companies have additional requirements put on them. The costs are passed onto the consumer and in this case the consumer is the small-business owner. That's the pressure it puts on me. That money has to come from somewhere. The price elasticity for our clients isn't very stretchy."
Jerdonek says offering excellent health coverage and benefits is a major factor in retaining employees, so it's not something to be toyed with. "We are in a highly competitive
industry," he says. "We have to attract and retain really smart people and in order to have the really smart people we have to do more than other firms are willing to do. And one of the things we do is we pay a substantial amount of our employees' health- care premium."
CEO Larry Meigs said the message the in-home senior care franchise is sending to franchisees is encouragement to grow instead of trying to avert the law.
"We're working hard to encourage to all of our franchisees to grow their way out of this as opposed to pulling back," Meigs says. "If you pull back to have only part-timers you're really going to be limited to provide your services. In our case the employees are the service themselves."
The in-home senior care franchise has roughly 450 offices that employee about 50,000 caregivers. Meigs says about 40% of his franchisees would meet the employer mandate.
That said, the company has pulled back on education and planning suggestions for its franchisees.
"Now what we tell them today might be outdated six months from now," Meigs says. "Even at our conference in Baltimore two weeks ago, we had three different attorneys give workshops
on health care reform and every one of them qualified their remarks. We have similar workshops scheduled for the remainder of the year -- we're retooling the events to be more generic. We don't want to be handing out a lot of information that's going to become prehistoric six months from now."
-- Written by Laurie Kulikowski in New York.
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