Some companies are seeing higher costs because of law, while others are saving money

  • Article by: TOM MURPHY , Associated Press
  • Updated: March 20, 2014 - 3:30 PM
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In this Tuesday, March 11, 2014 photo, Sara Rodriguez looks over an Affordable Care Act brochure, in Houston. Rodriguez, like others who gathered to listen to a presentation about President Barack Obama�s signature health care overhaul, says she can�t afford insurance, even for $50 a month.

Photo: David J. Phillip, Associated Press - Ap

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Sarah Curtis-Fawley will have to offer insurance to her workers at Pacific Pie Co. because of the health care overhaul, and the estimated $100,000 cost means she may have to raise prices or postpone opening a third restaurant.

On the other end of the spectrum, the owner of a 1-800-Got-Junk? franchise near Philadelphia figures he'll save money because his 12 workers now can shop for coverage on public insurance exchanges created by the overhaul.

"For an employer at my level, it's a win," said Eric Blum, franchisee of the junk removal service.

The Affordable Care Act, which aims to provide coverage for millions, is playing to decidedly mixed reviews in corporate America. Its impact on companies varies greatly, depending on factors such as a firm's number of employees and whether it already provides health insurance.

Some businesses are dealing with administrative hassles or rising costs, while others worry about the law's requirement that mid-sized and big companies offer coverage or face penalties. But the law hasn't meant big changes for every company. And some small businesses now can offer employees a benefit they wouldn't be able to afford without the law.

RISING COSTS

Wal-Mart Stores Inc., the largest U.S. private employer, expects $330 million in additional health care costs this year in part because company leaders think more employees are signing up for its insurance to meet the law's requirement that most Americans have coverage. The retailer covers about 1.1 million employees and dependents, and enrollment in its health plan will climb by about 100,000 this year.

Some companies that haven't provided insurance are preparing for the requirement that firms with 50 or more full-time employees offer coverage or face a penalty.

Curtis-Fawley said the cost of providing coverage for her 54 employees could amount to a tenth of the Portland, Ore., wholesale pie company's annual revenue of about $1 million. She has been talking with consultants to find an approach that would work.

"I haven't been able to find a plan that would seem to make sense financially," Curtis-Fawley said.

MAKING CHANGES

At the start of this year, United Parcel Service Inc. dropped health insurance benefits for working spouses of the parcel delivery company's nonunion employees who could get coverage elsewhere. UPS said the change was due to rising health care costs and the overhaul.

Indiana University has started trimming hours for about 750 employees who aren't considered full-time but averaged more than 30 hours a week so the university can avoid the requirement that it provide those workers coverage. Spokesman Mark Land didn't have an estimate for how much this will save in health care costs. But he noted that the university, which covers about 18,000 full-time employees, spends more than $213 million per fiscal year on health care, and its budget for that expense climbed more than 7 percent from last year.

"At some point, we had to balance our commitment to employees with the realities of our financial situation and our responsibility to taxpayers and students who pay much of the bill," he says.

ADMINISTRATIVE HEADACHES

Businesses owners say they have to take time away from running their companies to understand the law and explain it to employees. The overhaul also forces some without human resources staff to spend more on consultants to help them translate changes in the law.

About 78 percent of more than 700 employers surveyed recently by the benefits consultant Mercer labeled the increased administrative burden imposed by the law as either a significant or very significant concern.

And that has been intensified by several changes that have been made to the law's requirements. For instance, the deadline for employers with 50 or more full-time workers to begin offering affordable coverage has been pushed back and tweaked a few times. That buys companies time but also forces some to revisit and adjust their plans.

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