Surviving Obamacare Part I

The idea for this series of posts came from a blog actually involving a Phoenix-based pizza chain that clearly doesn’t know what to do to cope with Obamacare, and is probably isn’t getting good advice, either. Keep in mind that next month the IRS is supposed to send business owners a notice in July about what insurance carrier they have and how many employees they have. Given the scandals at the IRS, one wonders whether the notices will even go out on time.

This chain has 11 stores and about 350 employees, and at a minimum would have to spend about $700,000 a year to cover employees. And, in the ultracompetitive pizza biz, there’s probably not enough margin to spend money on healthcare.

So, what to do?

First, since most of the employees are young and healthy, they might opt out of coverage,  come Jan. 1, 2014, which they can do for $95. The chain could reimburse them. This is allowed.

What we might advise is not cutting employee hours back to 29 or fewer, to go under the minimums for Obamacare, because you’d wind up adding employees to work the hours, which although the employee expense is probably the same, managerial headaches increase.

What we might recommend is to ‘sell’ each of the locations to the managers in this case, to get the number of employees down to under 50. In effect, the stores become licensees. Tax returns for each store can be filed appropriately, and each location remains exempt.

There’s a second chain of about the same size in Phoenix (the number of stores is pretty common to a successful local chain), and we might try it out on them.

We plan to do a series of case studies as they become available for comment. Give us a call at 1-800-716-9626 if you have a situation on which we can help.

 

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