Dot's Diner enters a PPACA donut hole

By National Underwriter

National Underwriter


By Allison Bell

Small-business owners traded stories today about the looming effects of the Patient Protection and Affordable Care Act (PPACA) on their operations.

The witnesses brought in by the Democrats emphasized their gratitude towards the government for trying to help them pay for health benefits.

Nancy Clark, who has owned a New Hampshire ad agency since 1997, said she strongly believes in the value of PPACA and in the value of offering employees health benefits.

"I really believe that a healthy workforce is a more productive workforce," Clark said.

Another witness, Lawrence Katz, president of Jomar Cafe Inc., a Louisiana company that does business as Dot's Diner, said his company is suffering serious problems because it has 65 full-time equivalents.

"We're caught in this unintended donut hole," Katz said.

The business owners appeared at a Senate Small Business and Entrepreneurship Committee hearing on small businesses' concerns about PPACA.

Clark said she is one of the 96 percent of Americans who have benefited from PPACA.

Clark said she has taken advantage of the PPACA small-business health insurance purchase tax since it was created three years ago. The credit has averaged about $1,100 per year.

The credit "is not meaningful to a lot of businesses, but it is to me," Clark said.

This year, the premiums actually went down for every single employee, Clark added.

"For me, that's a really nice step in the right direction," she said.

Katz, the president of the Dot's Diner company, told lawmakers that PPACA requires companies with more than 50 FTEs to provide health coverage or else pay penalties, and that the PPACA small-business health insurance tax credit is available only to employers with fewer than 50 employees.

Small restaurant companies can simply send employees to the individual exchanges or use the small-group exchanges without fear of facing PPACA "employer responsibility" penalties, and many large restaurant companies already offer health benefits, Katz said.

For a company near the 50-FTE limit, all options look bad, Katz said.

If Dot's Diner continues to do business as is, the least expensive option may be for the company to pay the penalty to be imposed on "large employers" that fail to offer coverage, Katz said.

Covering the cost of the penalty payments will force the company to increase prices at its diners by about 2 percent to 3 percent, Katz said.

Katz said he also is considering two other strategies.

One would be to sell the whole company.

The other strategy would be to get the company under the 50-FTE limit by selling the company's two least profitable restaurants, which employ about 16 people.

Another restaurant executive witness, Kevin Settles, president of Bardenay Restaurant & Distillery in Idaho, said one challenge for his company is that many employees prefer to work 30 hours per week for lifestyle reasons.

But the company can no longer be as flexible about schedules, for fear that some employees may accidentally lose or gain full-time employee status.

Sen. Mary Landrieu, D-La., the chair of the committee, said she welcomed the business owners' testimony about PPACA.

"There are some glitches that need to be fixed," Landrieu said.

But Landrieu said Congress needs to fix PPACA, not go back to the rules that created the problems that PPACA is supposed to address.

Originally published on LifeHealthPro.com