23 May

Small businesses Fret Over Obama Health Law

Synergy Restaurant Consultants | Blog
Synergy Restaurant Consultants

One small business owner in Massachusetts, found that the state’s2006 health care law left him facing $15,000 in fines since it took effect. If you, as a restaurant business owner have even given it a glance, President Obama’s new health care overhaul will bring similar financial woes nationwide.

As business owners across the country weigh the new law, they’re looking to Massachusetts for harbingers of things to come.

Massachusetts’ law, which mandates near-universal coverage and requires that all businesses with 11 or more workers, not just restaurant businesses, offer insurance, provided the blueprint for the health law signed by President Barack Obama. Massachusetts employers who don’t comply face annual fines of $295 per worker.

While there’s been plenty of grumbling among restaurant business owners that the state law has squeezed them financially during a tough recession, there’s little evidence yet that the law is forcing employers to close or sending them fleeing for the border.

The national law doesn’t require businesses to offer insurance but hits employers with 50 or more workers with an annual $2,000-per-employee fee if the company doesn’t insure them and the government ends up subsidizing their workers’ coverage.

The national law also grants tax credits for businesses with 25 or fewer workers with average annual wages below $50,000. For critics, one of the most troubling aspects of the law is the fines. Massachusetts has already fined more than 1,000 companies over $18 million for failing to offer medical insurance to their workers.

The worry is that, if the economy turns up and a restaurant business hires more workers for one or more locations, the owner will face a critical decision when they near the 50-worker mark and is no longer exempt from penalties. The 51st employee could mean $100,000 in costs.

Don Day is worried. Day owns eight small businesses in McKinney, Texas, including two restaurants, a boutique hotel and several retail shops.

Although he employs 125 workers, he offers health care for just a few key employees. Just an extra $200 a month per employee for health care could set him back hundreds of thousands of dollars a year, a cost he can’t afford.

“It’s not just me, it’s every small business across this land,” he said. “A lot of small businesses are going to go out of business.”

We at Synergy will keep you informed on all the latest impacts the Health Care Law will have on the restaurant industry.