When Pat and John Newbury head to a Las Vegas for a meeting of McDonald’s franchisees later this month, they expect to spend at least a half day in meetings, hoping to learn how they must change their business in order to comply with the new federal health care law.
“I’m fairly certain it will have a major impact on us, but it’s really hard to know what to believe at this time,” said Pat Newbury, who owns and operates 11 McDonald’s restaurants in Billings and surrounding communities along with his sons.
Officials from the McDonald’s corporate office have devoted thousands of hours researching the numerous requirements and regulations in the Affordable Care Act, which was approved in 2010 and was largely upheld last year by the Supreme Court.
“We feel blessed to have McDonald’s helping us through this,” John Newbury said. “They have full-time staff that’s been working on this for a couple of years.”
Because the Newburys employ more than 600 people in their 11 restaurants, they expect that they’ll have to comply with many provisions of the new law. One provision of the ACA that goes into effect on Jan. 1, 2014 is a mandate that businesses with 50 or more employees must provide “affordable” health insurance for their employees.
Currently, McDonald’s employees are offered health insurance, which is paid mostly by the employer. Pat Newbury said up to half of his employees, many of them young and part-time workers, opt out of that benefit because they are already covered by a spouse’s health plan or simply because they would prefer to have a slightly larger paycheck.
“We pay for the premium except for about $10 a month,” Pat Newbury said.
At this point, there’s still a lot of uncertainty surrounding the health law. Regulations change frequently, and so far it has proven to be a challenge finding out details.
“For something that’s been around for as long as (the ACA) has been, you’d think they would have a better handle on it,” Pat Newbury said. “But it’s a disaster.”
“My hope is that we’ll be able to continue to keep our employees on health insurance and that they’ll be made whole,” he said.
Gene Meier, owner of Lewistown Propane and Fertilizer, has been providing company-paid health insurance as an employee benefit for more than 23 years.
“One reason I’ve done it is that I’ve seen a lot of young families have medical problems, and it can bankrupt them if they don’t have insurance,” Meir said. “Our wages are good wages, but this is one of the important benefits we can provide.”
Meyer said there’s a good chance that an employee who suffered a heart attack a few years ago would have suffered a serious financial setback had it not been for his company health insurance.
Meier doesn’t anticipate making any big changes in his health plan as new provisions of the health care overhaul kick in, but he’s not a fan of the new health law.
“My own opinion is, I wish the government would stay out of it,” Meier said. “I believe that business people who care enough should furnish insurance, but that it shouldn’t be government mandated.”
As the business community prepares for sweeping changes to the nation’s health system, experts have been sifting through thousands of pages of the health reform bill in an effort to help their clients navigate changes.
Recent public opinion polls show the ACA remains unpopular with many Montanans. Fifty-three percent of respondents to a Lee Enterprises poll last September opposed the law. Despite the law’s apparent unpopularity, research by the Bureau of Business Research at the University of Montana indicates that more than half of the state’s 195,000 uninsured residents will gain access to health insurance. An estimated 40,000 will become insured through subsidies, and an additional 69,000 will become insured if the Legislature agrees to expand Medicaid.
Among other things, the ACA requires individuals to purchase health insurance or face a fine. But the law also allows states to expand Medicaid coverage to non-elderly adults who earn up to 138 percent of the federal poverty level. That’s about $15,900 for an individual in 2013, or nearly $32,500 for a family of four. As of this writing, the Montana Legislature hadn’t decided on whether to expand Medicaid.
Even before the Supreme Court ruled on the constitutionality of the ACA last year, Eide Bailly, a regional accounting and consulting firm, made it a priority to help clients prepare for change.
“The partners decided we needed to do training for various people, and we took the assumption that the act wasn’t going to go away,” said Don Bagley, a certified public accountant and senior tax manager with Eide Bailly’s Billings office. After going through training that was equivalent of taking a couple of college courses, Bagley is now the designated health care champion in the firm’s Billings office.
Many business owners have expressed concerns about how the ACA will affect them, but certain businesses seem especially worried.
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“We’re seeing that businesses that have between 50 and 200 employees are the most concerned,” Bagley said.
How business owners will be affected by the ACA depends on several factors, such as how many employees work for the company, how many work full time and how much money they make.
The ACA also requires the creation of health insurance exchanges, where individuals and small companies can go to purchase insurance.
As part of its services geared toward the ACA, Eide Bailly has developed cost calculators to help clients plan for the change and determine the best way forward, Bagley said.
“Both the people and the companies they work for have to get educated about the changes,” Bagley said.
Some employers will decide to keep their existing insurance plan. For example, a law firm whose employees are relatively well compensated would likely fit into this category.
But it’s a different story if you own a retail store with employees who earn comparatively less money.
“The one with the a lot of low-income employees would probably be better off going to the exchange where they can get subsidies to pay for health insurance,” Bagley said.
“We can get their exact information and determine how much they would pay if they kept their insurance and how much if they gave it up and pay the penalty,” Bagley said. “We’re quantifying the cost in order to help them better decide what to do.”
But Bagley said many businesses must make other decisions besides how much insurance will cost.
“If you have insurance, does that help with recruiting, because you want to keep your best people,” Bagley said. “We’re quantifying the cost to help them better decide what to do.”
Steve Bentley, chief financial officer for Avitus Group, is also reaching out to clients, to help them plan for changes mandated by the ACA.
Avitus Group is a Billings-based professional employer organization that handles payroll, health insurance, safety, human resources management and other business tasks for its clients.
Bentley said just about every department at Avitus Group — human resources, payroll, financial services — has been fielding questions from clients who wondering about the effects of the health care act.
“We’re finding ourselves right in the thick of issues surrounding the Affordable Care Act,” Bentley said. At this point, many business owners still have a lot to learn about the ACA, he said.
One of the most important things a business owner can do is determine whether he must comply with the rule to provide health insurance, Bentley said. Avitus Group has been examining clients’ records so that they can be prepared when the new provisions kick in.
“We’re saying we’ll look at where they were during 2012, and if those numbers hold up during 2013, they’ll know whether theyr’e in compliance,” Bentley said.
Many of the rules on how the health care law will be implemented are coming from the Internal Revenue Service. Bagley and Bentley have both been keeping close tabs on regulations coming out of the IRS.
“What’s interesting is the idea behind health care reform was to insure more people. But what we’re seeing is a lot of unintended consequences,” Bagley said.
Despite all of the uncertainty surrounding the health care law, the Newburys remain confident that they’ll adjust.
“On Jan. 1, 2014, we’ll still be open,” Pat Newbury said.