The Affordable Care Act mandate that requires companies with at least 50 full-time employees to provide health insurance has been placed partially on hold until 2015. This might seem like good news, but it's setting back small business owners who already adjusted to the new mandate requirements.
“During this 2014 transition period, we strongly encourage employers to maintain or expand health coverage,” Mark Mazur, assistant secretary for tax policy at the Treasury Department, said.
However, businesses like Fatburger, which owns fast food restaurants, had already begun to adapt to the rules that were supposed to be in place by January 2014. Fatburger eateries were already cutting worker hours below the 30-hour limit that counts as full-time employment under the Affordable Care Act, according to CEO Andy Wiederhorn who talked to CNN Money.
In fact, Fatburger restaurants began to “job share” its employees with other restaurants. This means that an employee would work about 25 hours at Fatburger, and then work another 25 at another franchise, preventing him from being a full-time worker under the Affordable Care Act. Other companies at the International Franchise Expo in New York City admitted to the same practice.
“All it’s doing is causing confusion, anxiety, and the workers are paying the price. Now, the mandate’s a moving target. It’s very, very challenging,” Wiederhorn said.
Wiederhorn had already given up $30,000 at his second company, Buffalo’s Café chicken wing restaurants. One of the Buffalo’s Café franchise owners had planned to close his restaurant to get below the 50 employee number, and Wiederhorn reduced the royalty fee his corporation charges franchisees in response. Wiederhorn could have waited a year, but the delay came too late.
“I’m definitely getting the short end of the stick,” he said. “We gave them the concession to save the jobs. And now the law’s been delayed. We feel like we have whiplash here.”
Many small business owners hope the delay is a step on the way to repealing the act.
In addition to the delay, the administration also announced Friday that it will scale back requirements for new insurance companies to verify consumers’ incomes and health insurance status until 2015. In the meantime, it will rely more on consumers’ self-reported information to determine who qualifies for benefits under the Affordable Care Act.
“An awful lot of the economy is cash economy,” Timothy S. Jost, a law professor at Washington and Lee University and consumer advocate, said. “If we had to verify every statement that was made to the IRS, our economy would collapse.”