Obamacare, a word that strikes fear into the hearts of many and sparks furious debate among others. Well, ever since the “Affordable Care Act” passed into law, many small businesses have been very vocal about what types of measures they will take to avoid paying for basic health care coverage for their employees. Some of these measures are drastic, like cutting hours and firing workers.
In addition to that, a lot of companies are even saying that paying the government’s penalty to break the law will actually be cheaper than following it, according to a report by The Wall Street Journal. The Obamacare provision, which goes into effect next year, requires businesses with 50 or more full-time workers to provide health care coverage for employees.
Any business that refuses must incur a $2,000 penalty for each full-time worker above the 30-employee threshold. A full-time employee is any employee who works more than 30 hours a week in a given month. A lot of small businesses cannot afford the new healthcare plan and are only able to afford the penalty.
Owner of Consolidated Management Rick Levi told The Wall Street Journal that the $2,000 penalty is all that he is able to afford. Consolidated Management is a Des Moines-based company that runs cafeterias at schools, offices and jails in 10 states around the country. Levi employs 102 workers and will be required to offer coverage to many under the new law at a cost of more than $500,000 per year, provided every employee takes the new insurance plan. On the flip side, the penalty will only cost him $144,000.
There are a lot of companies that are looking for “alternatives” to the Obamacare plan, some of which are even national chains like Wendy’s and Popeyes. These companies say that even if employees are provided the mandated coverage by employers, they will still be unable to afford the cost of the premium.
Ralph Bower, President of Popeyes, told the Huffington Post in an email that Obamacare is “unaffordable to our team members”. However, some research shows that some people will deem healthcare worth the price and also suggests that companies will be surprised at how many people will enroll despite the fact that it will cut into their paycheck.
Source: Huffington Post – Small Businesses Opt To Pay Obamacare Penalty Instead Of Offering Health Insurance