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Affordable Care Act worries LI small businesses

Insurance agent Steven Spiro at his office in

Insurance agent Steven Spiro at his office in Valley Stream. (June 13, 2013) Credit: Linda Rosier

Boris Goldstein, who started Eco Taxi in Huntington two years ago, doesn't plan to buy health insurance for himself or his eight contract drivers through New York's health benefit exchange.

"I'm not ready to take on any new expenses," he said.

But Jim Kelly, chief executive of JVKellyGroup, an expense management company in Huntington, who already offers health insurance to his 30 full-time employees, said he will definitely look to the exchange.

"We're always looking for any way we can save money," he said.

Expanding health coverage through businesses -- especially small businesses -- is one of the cornerstones of the federal Affordable Care Act. The state is setting up a health insurance exchange to expand coverage to individuals, families and businesses with 50 or fewer employees who are uninsured or underinsured. Of the 1.1 million New Yorkers -- including 150,000 Long Islanders -- the state projects it will enroll, its goal is to enroll 100,000 small businesses covering 450,000 employees.

Beginning in 2015, businesses with 50 or more full-time employees will be fined if they don't offer coverage for those who work 30 or more hours per week.

But smaller businesses are exempt from the penalties, and employers with 25 or fewer full-time workers who earn an average of less than $50,000 a year are eligible for a tax credit if they offer health coverage.

According to the Kaiser Family Foundation, in 2011 only 57 percent of businesses nationally with 50 or fewer workers offered health benefits, compared with 92 percent of businesses with 51 to 100 workers, and 97 percent of businesses with 101 or more.

On July 15, the state will unveil which plans have been approved for the exchange and how much they will cost. Enrollment is to begin Oct. 1, and health coverage, Jan. 1.

In April, the federal government announced it would delay the marketplace for small businesses in the 33 states that opted to let the federal government operate exchanges and delay the requirement for other states as well. But New York decided to go ahead with its exchange for both individuals and small businesses.

Exchange officials have been appearing at small-business expos around the state and a $40-million media campaign is planned to begin in September. Yet Craig Hasday of Rockville Centre, chief operating officer of insurance broker Frenkel Benefits in Manhattan, said he believes many small-business owners know little of the state's efforts.


'Fear of the unknown'

"There's a bit of fear of the unknown and dread of January 1 and a tremendous amount of misinformation," he said.

Frank Gaudioso, co-owner of F&D Supply, a hardware and masonry supply business in Copiague, admits he's worried.

"It's a good idea in principle, but my fear is that it's going to be a quagmire," he said. Gaudioso already offers health insurance to his five full-time employees, which he said represents about a quarter of the company's fixed costs. "It's the most volatile of my fixed costs," he said. "It goes up every year 15 to 20 percent and you have no control."

Kelly, of JVKellyGroup, agreed: "I'm hoping it will provide some relief for some people, but because they have to build it, I worry that -- some way, somehow -- it's going to cost me money."

As for larger companies, some plan in response to the law to expand their health insurance offerings -- and avoid the fine.

Michael Bohlsen, whose family owns six upscale restaurants on Long Island, said they will begin offering health insurance to their 225 full-time employees.

"We're trying to embrace it," he said, referring to the Affordable Care Act.

Bohlsen said he has heard grumblings from some companies that they intend to cut back on full-time employees to avoid the penalty -- $2,000 per each employee who works 30 hours or more, excluding the first 30 employees. But he said he decided to view the law as an opportunity to keep employees happy.

"We have many loyal, hardworking, talented people and our goal is to keep them. Health care is part of that," he said.

The Cumberland Gulf Group, which includes Cumberland Farms, announced in June it is reclassifying 1,500 employees -- including about 40 on Long Island -- as full-time workers in order to offer them health coverage. "We believe we're going to get a higher level of employee commitment," said John McMahon, chief human resources officer.


Brokers hope to gain

Insurance brokers who have been closely monitoring the state's progress in setting up the exchange said they are hopeful, both that the exchange will offer more affordable plans for small businesses and that it will yield more business for them.

The state will train "navigators" to help people figure out which plans work for them. But 88 percent of small businesses that offer health plans now use insurance brokers, according to the state, and many are betting that they will still turn to brokers.

"It's going to be exciting," said Neil Weingarten, vice president of Conference Associates, an insurance agency in Patchogue. Weingarten said he believed small businesses won't be comfortable relying on navigators.

"In my opinion, professional agents and brokers will continue to provide services that have some value," he said.

Steven Spiro, owner of The Excelsior Group, an insurance company in Valley Stream, agreed. "I'm looking forward to it," he said. "If everything works, it's possible it will work toward stabilizing rates."


Bringing in employers

But that means attracting employers such as the healthy 27-year-old Goldstein. He complained that he is already required to pay for car insurance for his fleet of four hybrid taxis, workers' compensation, disability insurance and unemployment insurance. One more fixed cost in his new business could push him over the edge, he said.

On the other hand, he said he will check out the exchange once it's up and running. "It's definitely something I will look at if it's reasonable," he said.