Companies weigh health care changes
The Associated Press January 26, 2013 9:50PM
Updated: February 28, 2013 7:15AM
INDIANAPOLIS — The federal health care overhaul is causing many Indiana employers to wrestle with decisions on whether to provide health benefits to workers who aren’t typically eligible for most company plans or trim their hours to avoid extra costs.
The 2010 Patient Protection and Affordable Care Act requires companies to begin offering health insurance to employees working at least 30 hours a week beginning next year. Employers with more than 50 workers that fail to offer health benefits for qualifying staff can face steep fines.
The law also creates online health insurance exchanges to offer workers coverage instead of their having to rely on employers. But it could bring big expenses to some companies.
“This is a very, very big challenge for the company, and for most other companies,” said Charlie Young, chief human resources officer for Indianapolis-based electronics and home products chain HHGregg Inc. “There’s a lot of ambiguity out there as we approach 2014, and we’re only 11 months away. It’s pretty intimidating.”
HHGregg has 6,600 employees, 90 percent of whom work full-time and are eligible for the company’s insurance plan. The company expects that expanding coverage under the law could add up to seven figures to its costs.
Some of that expense will be offset by tax benefits HHGregg expects to receive by offering the insurance, Young said.
“We’re pretty emphatic about keeping our program as we move forward,” he said.
The decision isn’t as easy for some other employers, especially those in the retail, restaurant and hospitality sectors. Many employees in those industries work less than 40 hours a week and typically receive no health benefits. Those benefits that are offered are usually limited and would fail to meet the minimum coverage requirements under the health care law.
John Schnatter, CEO of the Papa John’s pizza chain, drew criticism when he said his Louisville-based company might cut employee hours rather than pay for the insurance. The statement sparked threats of boycotts and prompted Schnatter to say the chain would continue offering insurance to its employees.
Scott Wise, who operates Scotty’s Brewhouses and other restaurants throughout Indiana, says he has about 130 salaried employees who will be affected by the law and is weighing his options in hopes he can avoid cutting their hours so he doesn’t have to pay for health insurance.
“Full-time staff are some of your best employees,” he said. “Those are some of your most loyal, hardest-working people.”
But costs are a consideration, he acknowledged.
“I don’t know what the right answer is,” Wise said. “I understand that we want the world to have affordable health care; I just don’t know that you have the ability to do it in a perfect world.”
Jay Ricker, president of Anderson-based Ricker Oil Co., a chain of 49 gas stations operating locally under the BP brand, said he expects to expand coverage to his 650 employees, many of whom work part time, and pay the additional cost from profits. But he says some companies won’t be able to afford that option.
“Some people could go out of business or go to all part time,” he said. “I think it’s going to be a huge issue.”