http://www.msn.com/en-us/money/smallbus ... li=BBieTUX
"When LaRonda Hunter opened a Fantastic Sams hair salon 10 years ago in Saginaw, Tex., a suburb of Fort Worth, she envisioned it as the first of what would eventually be a small regional collection of salons. As her sales grew, so did her business, which now encompasses four locations — but her plans for a fifth salon are frozen, perhaps permanently.
Starting in January, the Affordable Care Act requires businesses with 50 or more full-time-equivalent employees to offer their workers health insurance or face financial penalties that can exceed $2,000 per employee. Ms. Hunter, who has 45 employees, is determined not to cross that threshold. Paying for health insurance would wipe out her company’s profit and the five-figure salary she pays herself from it, she said.
“The margins are not big enough within our industry to support it,” she said. “It’s not that I don’t want to — I love my employees, and I want to do everything I can for them — but the numbers just don’t work.”
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For some business owners on the edge of the cutoff, the mandate is forcing them to weigh very carefully the price of growing bigger.
“There’s kind of a deer-in-headlights moment for those who say, ‘I have this new potential client, but if I bring them on, I have to hire five additional people,’” said Philip P. Noftsinger, the payroll unit president at CBIZ, a financial services provider for businesses. “They’re really trying to assess how much the 50th employee is going to cost.”
Nearly all large companies provide health care benefits, but only 54 percent of businesses with three to 49 workers offered coverage to their workers this year, according to an analysis by the Kaiser Family Foundation. Paying even a portion of the cost can be expensive. The average annual premium for workers at small companies currently tops $6,100 for individual insurance and $16,600 for family coverage.
That premium is typically shared between the employer and employee. Businesses that fall under the health care law’s mandate are required to offer their workers “affordable” insurance, which the law defines as individual coverage that costs less than 9.5 percent of the employee’s household income. (Because employers do not know how much money their workers’ relatives make, their options for compliance include basing their calculation on only their own employees’ wages.) For a full-time, minimum-wage employee making $14,500 a year, an employer offering an average-price individual plan would have to pay around $4,700 a year.
Added to that cost are the administrative requirements. Starting this year, all companies with 50 or more full-time workers — even those not yet required to offer health benefits — must file a set of new tax forms with the Internal Revenue Service that provide details on employee head count and any health insurance offered. Gathering the data requires meticulous record-keeping.
“These are some of the most complex informational returns we’ve ever seen,” said Roger Prince, a tax lawyer with the consulting firm Berry Dunn in Portland, Me.
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The health care law defines a full-time-equivalent employee as someone who works an average of 30 or more hours a week — and the hours worked by some part-time employees count toward the calculation.
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Tony Lamb has 700 franchisees for Kona Ice, his shaved-ice truck business, but his corporate staff in Florence, Ky., has only 44 full-time-equivalent positions. It took an outside consultant to confirm that number; his internal accountant’s calculation came up with 42.
Kona Ice offers a retirement plan, profit-sharing and other perks, but no health benefits — and one of Mr. Lamb’s concerns about expanding is the salaries that he priced accordingly.
“I said, ‘Instead of paying you $50,000 and $15,000 in health care, I’ll pay you $65,000,’” he said. “You can’t go back on people and change the rules. No one wants a pay cut. I think it’s a very big deterrent to growth.”
Some owners who began offering insurance this year to comply with the new law have been surprised by how few employees purchased it. Participation rates as low as 1 or 2 percent are not uncommon in industries like restaurants and retailing, in which employees making close to the minimum wage may struggle to afford the premiums."
Of course someone said above:
"Dropping enrollment numbers actually makes sense. It's going to correspond to employment numbers. As I recall when you can get employer coverage you have to."
However, according to the article:
"Without the mandate, the law’s creators feared, companies would be tempted to cancel their insurance benefits and encourage all of their employees to move to the online marketplace exchanges created by the law, where many low- and middle-income workers qualify for government subsidies. Those who are offered insurance through their jobs are ineligible to collect subsidies if they instead choose to buy coverage through the exchanges."
So with an employer provided health insurance option and a participation rate of 1 to 2% for a number of jobs it would appear that many workers are indeed opting to go bare.