For the better part of 52 years, Joseph Rosati Plumbing & Heating has offered its employees fully paid health insurance.
"My father prided himself in being able to offer health benefits to his employees," says Regina Weinhardt, who, along with her brothers, Joe Jr. and Anthony, took over the company after their father died in 2007.
But when the company was ready to renew its group policy last month, Weinhardt got a bad case of sticker shock - an 87 percent rate increase. Her broker was able to find Weinhardt a more affordable policy with less coverage. But it left the small-business owner wondering whether she could sustain her father's tradition.
"I don't like that I have to consider not offering health care," says Weinhardt, 54. "My frustration is that I don't know where the point is that it is not feasible" to offer it.
Before the Affordable Care Act, group policy rates focused less on age and smoking and more on the plan's overall use. But that changed with the law. Just as in the individual marketplace, insurers now consider age and whether group members or their spouses smoke.
"It is very difficult for the smaller groups under 50 employees because of the age rating in this area," says Weinhardt's broker, Marie D'Antonio, a senior account manager for Creative Benefits in Newtown Square. "That's the biggest challenge, especially if you have employees who smoke. Now there is a smoking differential."
The health law does not require small businesses with fewer than 50 full-time equivalent employees to provide health insurance. Yet some small businesses, like Rosati Plumbing, want to offer coverage anyway.
In fact, long after other companies started requiring employees to contribute to their health insurance, Rosati Plumbing was still paying the complete cost for all of its employees and their families.
That changed a few years ago, when rising health-care costs caught up with the company's tradition. Weinhardt finally told workers enrolling in the company's gold Premier HMO plan they would have to pay a portion of their monthly premium.
"Many of my men live paycheck to paycheck," she says. "They're struggling, and now everyone's health insurance has gone up. For some, it has even doubled."
The East Lansdowne company's 25 employees range in age from the early 20s to one man on Medicare in his 70s. Two workers and one spouse are smokers.
This year, a worker with a child will contribute $38.69 a week to health insurance. A family will pay $79.23 a week.
The company will, however, continue to pay the entire premium for employees who have the lower-cost bronze PPO plan. But to keep premiums down, Weinhardt raised the deductible from $2,500 last year to $5,000.
"We keep talking about possibly not offering insurance anymore," she says. "Maybe we would pay our employees a higher wage instead of health care."
That may sound good in theory but it might cost Weinhardt's employees more in practice, says Mark Pauly, an economics and health-care management professor at the University of Pennsylvania's Wharton School.
A worker with a middle-class-and-above income, says Pauly, "will not be eligible for a substantial tax credit subsidy on the exchange." Plus, there is no guarantee they will find a comparable plan for what they currently contribute. And then there are the taxes.
"They will have to pay tax on the cash that the employer pays them in lieu of the benefit," Pauly says. "So they may end up actually behind because the value of the tax break they lose may be less than the subsidy they would get on the exchange."
Pauly says offering benefits like health insurance is "a good way to attract and retain" high-quality workers. His advice to Weinhardt and other small-business owners is "to hang in there with group coverage" even if it means giving smaller raises next year.
"I actually would call the men and women together and say, 'What do you want to do here?' " he says. "The tax considerations are important. If you do pay them cash instead, they are going to have to pay the tax on that income, whereas the extra they pay for the upgrade may be tax-shielded if it's in group insurance."
Weinhardt has a year to do her homework before making a decision. If the company decides to provide health insurance, "it needs to be affordable for our people" and she won't give them "stuff that I wouldn't use."
And then there is her father's legacy to consider.
"He felt that [health insurance] was something he needed to provide," Weinhardt says. "I feel the pressure to do that."