Confusion over health-care law stymies owners

Rose Wang looks at her staff of 70 employees and wonders whether she'll have to lay off some of them to comply with the health-care law.

Wang, owner of Binary Group Inc., an information-technology firm in Alexandria, Va., is one of many small-business owners who will be required to provide health insurance for her staffers under a provision of the law that goes into effect Jan. 1. Wang already provides insurance, but she's worried because she doesn't know how much she'll have to pay under the Affordable Care Act.

Wang's worry is a gut-wrenching dilemma that many small-business owners may face. Now that President Obama has won reelection, the health-care overhaul, which presidential candidate Mitt Romney promised to dismantle, will go into full effect. Companies must decide before the start of 2014 what they'll do to comply with the law. Right now, no one knows how much the insurance will cost, and owners aren't sure whether they'd be better off not buying it and paying the government a penalty of $2,000 per worker. Some owners are even threatening to defy the law. The big challenge for most small businesses is that they just don't have enough information to make concrete plans.

If Wang can't afford the insurance, she says some of her staffers may have to go.

Not providing insurance and paying the penalty is another alternative. "That's what we're going to decide by 2014, if the math is so obvious it's cheaper for us to do the $2,000 per head," Wang said.

The health-care law generally requires companies with 50 or more full-time workers to provide health insurance for their staffers. If they don't provide any insurance, they'll have to pay the $2,000 penalty for each worker on their payroll. If they buy insurance that doesn't meet the government's tests for affordable coverage, they'll have to pay $3,000 for each worker whose coverage isn't deemed affordable. If that seems confusing, that's just the beginning. There's a labyrinth of other details that include plans that can be "grandfathered" in and a maze of other fine points that small-business owners are trying to decipher.

In some industries, owners are considering cutting employees' hours to under 30 a week, which would make those workers no longer subject to the law. Darden Restaurants Inc. said in October it was going to try replacing full-timers with part-time workers at its restaurants, including Red Lobster and Olive Garden. After a public backlash, Darden last week reversed its decision.

Even though some key details of the health-care overhaul haven't been worked out - like how much insurance offered through exchanges will cost - there is already a lot of information to sort through. Figuring out the details is keeping human resources consultants and benefits brokers busy.

There are so many unknowns about the law that Campus Cooks is hiring an employee to determine what the company's options are and how much they'll cost. The provider of dining services for fraternity and sorority houses in the Midwest, Florida, and Texas has 125 employees.

"I don't know what's in the law," said Bill Reeder, president of the Glenview, Ill., company. "I'm really hiring someone whose job, in part, for the next six months is to figure out this thing."