Expert shares advice on mitigating health care mandates

Many restaurateurs regard the Patient Protection and Affordable Care Act as an inflexible “pay or play” proposition that will saddle their companies with unwelcome costs, whichever choice is made.
 
But an expert participating in a symposium called “Demystifying Health Reform in a Franchise World” said health care reform offers operators the latitude to craft individualized plans that can help offset some of the law’s anticipated expenses. The New York event was hosted by lender GE Capital Franchise Finance and attended by Nation’s Restaurant News.

“There is no ‘one size fits all’ plan,” said Mike Kahley, senior vice president of Lockton Companies LLC, a Dallas-based firm that provides insurance, benefits and risk management services. “There are all different approaches for different businesses.”

Kahley recommended that operators examine a number of adaptable components that can help shape a program that works best for their business. At the same time, he said, operators should determine what kind of social contract a company wants to have with its employees, and shape a health care program that fits into a corporate philosophy.

As the law currently stands, by 2014 businesses with 50 or more full-time-equivalent employees can opt to either “play” by offering affordable health care insurance to each qualifying worker, or “pay” a penalty of $2,000 for each. An individual must work 30 hours per week or 130 hours per month to be classified as a full-time employee, or FTE.

Under the law, if an employer chooses to pay the penalty, the first 30 full-time employees are considered exempt. In other words, if an operator employs 60 full timers, he must pay the penalty for only 30.

But Kahley told the restaurateurs that it doesn’t have to be an all-or-nothing solution. There are ways to fine tune a company’s health care program, he said.

Deciding to offer no coverage is a nonstarter for many operators because of penalty expenses, he said. Based on Lockton research, operators who decide to pay a $2,000 annual nondeductible penalty for each FTE will spend an average of 70 percent more than current health care costs.

On the other hand, deciding to “play” by offering all full-time employees the same plan offered to corporate staff or general managers also may be onerous.

As a result, Kahley advises operators develop a plan that considers a number of variables and adjusts for a business’ particular organization.