NY Times

Barack Obama signing the Patient Protection an...
Barack Obama signing the Patient Protection and Affordable Care Act at the White House (

This is a article about the fear of the Affordable Care Act in low income industries. Restaurant and Hospitality owners could be impacted negatively by the tax penalty of not offering a group health plan.

In these industries it is difficult for employees to pay their portion of the premium on a group health plan. These industries have been known to have high risk from a claims standpoint which leads to higher premiums.  It will be even tougher once qualified health plans are established because the cost will go up.

Small business owners are very hesitant to expand their operation with the penalty right around the corner.  If a small business has 90 full time employees and is not offer a group health plan, the penalty is estimated at $120,000 a year.

These business are unable to cover the entire cost of the health insurance premium. The employee then will elect not to take coverage. Then group plan does not meet participation requirements and loses the coverage. So the employer has tried to establish a group health plan but does not meet requirements. Now they will be tax.

A lot of small business will have a difficult time affording the tax. There is going to be a scramble to find options that will help them. Those options could be making full time employees part time. A employee that was working 40 hours a week is now working 29 hours. They are no longer eligible for group health and the employer may not have to pay a penalty. This could be a common practice in the low income industries.

These low income employees should do better purchasing a policy through the federal exchange. In the exchange they would not pay more than 9.5% of house hold income towards a health insurance policy. These families may still have a hard time picking up the 9.5% . Look at a family of 4 with house hold income of $60,000. They may have a hard time budgeting for $5,700 a year in health insurance.