For years, politicians have been taking sides and spewing half-truths about Obama care. There is such a convoluted mixture of facts and myths swirling around the Affordable Care Act that most people have no clue what the law actually does. Amidst all of this confusion, there is one common theme about the law that does hold true: People and businesses in the retail industry will be one of the largest groups impacted by Obamacare. This article will take a look at how the Affordable Care Act affects big and small retail stores, and their employees.
Small Business Retailers
Despite the efforts of big box corporations to push small businesses out of the way, the majority of retailers are small businesses; small business retailers account for nearly 60 percent of all retail revenue. Also, unlike big box retailers, over 95 percent of all small businesses successfully operate with less than 50 employees. This last number is important because it highlights how the Affordable care Act will impact most small businesses; the law stipulates that any small business with less than 50 full-time employees cannot be penalized for not providing their employees with no or substandard health insurance.
Over 90 percent of small businesses have fewer than 25 full-time employees, most of whom cannot currently afford to supply their employees with healthcare. These businesses get the special privilege of receiving tax credits of up to 35% of the contributions that they provide for their employees’ insurance premiums. Starting in 2014, this perk becomes a 50 percent tax credit. In other words, those small businesses with less than 25 full-time employees who cannot afford to insure their employees will not have to. If they would like to, though, Obamacare will offer a helping hand. A drawback of this part of the law, though, is that some small businesses could see this as a reason to keep their full-time staff at or below 25 people in an effort to maintain the tax incentive.
96 percent of all small businesses with less than 50 full-time employees already offer their employees insurance, but they currently pay premiums nearly 20 percent higher per employee than big corporations. Obamacare’s Small Business Health Options Program (SHOP) exchange system will change this drastically, because it forces insurers to offer insurance plans on an open market, instead of doing backdoor deals with big corporations for lower rates. The SHOP exchange system will ensure that the small retailers get fair treatment with regards to insurance premium costs. 75 percent of small business owners cannot even insure themselves in the current insurance market; the SHOP exchange will provide a gateway for these people do obtain their own health insurance.
All of this means that most small business retailers are either unaffected Obamacare or benefit from it. Not only would cutting employee hours be bad for business for them, but they would be doing this in a fight against phantom penalties.
The most controversial part of the Affordable Care Act, the employer mandate, will impact big box retailers and some small retailers with 50 or more full-time employees. The employer mandate issues a tax penalty of $2,000 for every full-time employee that those larger businesses that refuse to provide their employees with adequate insurance have. This excludes the first 30 full-time employees, so a company with exactly 50 full-time employees, for example, would pay a penalty for 20 employees. 95 percent of large businesses already offer their employees adequate insurance, so most of them will be unaffected by this part of the law. Some companies may decide to cut hours to skirt the employer mandate, but this has proven to be bad for business.
The ones who will least benefit from the Affordable Care Act are the large companies who have been using their buying power to negotiate massive insurance premium discounts. This is to be expected, as advocates of Obamacare have made it clear that the law is designed to help those who cannot afford healthcare to obtain insurance. They only make mention of large, wealthy corporations when discussing how their buying power has created an unfair advantage in the insurance market.
Retail employees will see varying effects depending upon what type of retailer they work for.
• Employees of Retailers with Less Than 25 Full-Time Employees
This group should see the most positive benefits from the Affordable Care Act, because their employers are now incentivized (tax benefits) and enabled (SHOP exchange) to help them obtain health insurance.
• Employees of Retailers with 26-49 Employees
This group will be least affected by Obamacare, as most of their employers already supply them with healthcare and the law does not direct any mandates or direct incentives towards these employers. They will, however, see slightly reduced healthcare cost and improved coverage because of the SHOP exchange.
• Employees of Large Retailers
About 4 percent of individuals working for large retailers are expected to be negatively impacted when Obamacare is fully implemented—at first. A few large retail employers are expected to cut hours and reduce staffs in an effort to circumvent the employer mandate penalties, but this is expected to change once they realize just how bad for business a move like this is.