With the Affordable Care Act set to take effect in 2014, many small business owners are still uncertain how the new law will impact their business. While much remains to be seen, Pet Business reached out to a handful of pet store owners around the country to discuss the healthcare options they currently offer their employees and how they foresee the Affordable Care act affecting their business.
Pet Business: Do you offer healthcare to your employees? Why or why not? How do you think the Affordable Care Act will impact your business?
Yes, we offer healthcare to our employees at Pet Life. I believe it’s an essential part of any good benefit package, and it’s a prerequisite for attracting and keeping truly great people.
The Affordable Care Act will cost us all some money. The health benefits I’ve set up at Pet Life meet the minimum value criteria of the program, and our current participation meets the insurance carrier’s requirements. However, we will have to change some of our compensation structure at the entry level in order to negotiate the new laws. An employee’s monthly premium contribution maxes out at nine and a half percent of their salary, which doesn’t amount to much at that entry level. For example: $9 per hour by 30 hours a week equals $14k annually, 9.5 percent of which is $1,333 divided by 12 months, which equals $111 they can put towards the monthly premium. Small businesses like mine will have to decide whether to decrease that person’s hours to be under 30 per week rendering them ineligible for the program, pay a higher percentage of their insurance premium or pay a higher wage.
In the end, the employee either will work and earn less, or the employer will incur higher operating costs and probably raise their prices to compensate so the general public will ultimately foot the bill. The alternative for me is to not offer health insurance and let my employees figure it out for themselves with the government-run exchanges. That isn’t what I would want for myself, even though it would most likely cost my business less to do so. For now, I will continue to offer healthcare as a benefit to my employees and will pay close attention as the specifics of the new laws come to light.
— Pete Risano, president of New England-based Pet Life, a retail chain with 13 stores.
Providing unmatched care to our human clients, as well as the four-legged guests, is the cornerstone of the Paradise 4 Paws experience. As such, our team is our greatest asset. We believe in the health and wellbeing of our team and have offered healthcare to all of our full-time employees from the beginning. Since Paradise 4 Paws is considered a small business, and it already provides a healthcare plan, the Affordable Care Act helps us in providing better options for our employees through the Health Insurance Marketplace, and provides tax incentives for Paradise 4 Paws. While I believe there will be some growing pains and initial administrative overhead, we are committed to this program and look forward to providing our team with even better options when it comes to their healthcare.
— Saq Nadeem, owner of Chicago-based Paradise 4 Paws.
Because we have less than 50 full-time employees, we never qualify for healthcare insurance group rates. Store-owners, just like the employees, are subject to outrageous individual policy premiums and unrealistic deductibles. Because our insurance company doesn’t offer employees rates that are better than any other company, all we can do is offer healthcare allowances in order to assist with the cost of an employee’s health insurance when they secure a policy on their own. This industry is labor intensive and simply doesn’t have enough of a net profit margin to provide health insurance at the current rates. Everyone knows pet store owners don’t do this for the money. No one in the pet industry is getting rich. The money simply isn’t there. Some pet store owners can’t even afford their own health insurance, let alone anyone else’s. In our case, our monthly health-insurance premium is more than our house payment, and our deductibles are more than our monthly premiums.
Unfortunately, since small businesses with less than 50 full-time employees are exempt, not much will change for us directly. We are hopeful, however, that the state insurance exchanges will have an effect on insurance rates overall, and perhaps we will finally be able to afford insurance for our employees who need it. If not, since our employees will be required by law to have insurance that we cannot provide, it’s possible many employees will be forced to quit their small business jobs and seek employment with larger corporations that can afford to provide insurance.
— Sherry Emerson, co-owner of Lawrence, Kan.-based Pet World.
I am the sole employee for my store, Sweet Paws Bakery, so I do not offer healthcare insurance.
I am excited about the health insurance exchanges opening in 2014. This will create more power for small businesses to be able purchase affordable healthcare insurance by getting better rates that were only for huge companies before. This will help me as a business owner obtain affordable healthcare insurance and thereby increase the likelihood of hiring new employees.
I feel companies that do have full-time employees should offer health insurance. It will promote an increased value to work for that business, thereby helping it to obtain a more proficient workforce that might have gone to work for a larger company that offered insurance. It is most likely not all full-time employees will take the health insurance offered because they might be younger than 26 years old, so they are covered by their parents insurance, or they might be on a spouse’s insurance plan.
— Colleen O’Fallon, owner of Gainsville, Fla.-based Sweet Paws Bakery.
We offer health benefits to our full-time employees after 90 days. I consider it a cost of doing business. We need to do this to be competitive in the Seattle job market and retain staff, but besides that it’s the right thing to do. Being without health insurance in this country is a very risky thing. The husband of one of my key employees had no insurance and needed emergency surgery, and the expense caused them to lose their house and nearly declare bankruptcy. It’s hard to be effective in your job when your life is collapsing around you.
We’ve been offering health insurance for almost 20 years. Back then it cost $100 a month with no deductible or co-pay. Today it cost about $400/month. The company pays 75 percent and the employee pays 25 percent, with a deductible of $500 (to the employee) and various co-pays. We’ve kept our premiums and deductibles down by utilizing an health reimbursement arrangement where the company pays the difference for a higher deductible. Ours was $2,000. In the past year, only three of our employees went over $500 in deductible expenses, so this year, instead of an increase in premiums, we are guaranteeing up to $3,000 in deductible expenses.
The Affordable Care Act has already had a positive effect on our business, because adult children may now stay on a parent’s plan until age 26, many of our younger employees are doing so.
— Susan Moss, owner of Seattle-based All The Best Pet Care, a retail chain with 10 stores.