US Health Care Law: 5 Franchise Facts Getting Lost in the Politics

Since the Supreme Court upheld the Patient Protection and Affordable Care Act (PPACA) in June 2012, the International Franchise Association (IFA), the National Federation of Independent Businesses (NFIB) and some business owners have communicated their disappointment with the Court’s decision. While the political arguments carry on, decision-makers in franchise systems and units must focus on how their businesses will be affected.

Here Are 5 Franchise Facts You Need to Know:

1. Some business associations fear “looming employer mandate penalties”.1 The federal

government wants you to know that small businesses with fewer than 50 employees are exempt from the law’s requirement of employers to contribute to the coverage of their employees. Since 96 percent of all U.S. businesses, including franchise unit owners, fall in this category, only about 200,000 businesses are subject to the requirement.2

2. Franchise owners with fewer than 25 employees who provide health insurance can qualify for a tax credit. For franchise owners offering health care benefits through the insurance Exchanges, the credit will increase up to 50 percent in 2014. According to the Internal Revenue Service, “if you are a small employer with fewer than 25 full-time equivalent employees, pay an average wage of less than $50,000 a year, and pay at least half of employee health insurance premiums, then there is a tax credit that may put money in your pocket.”3

3. Franchise owners of indoor tanning businesses specifically are affected by the first tax increase resulting from the Affordable Care Act. On July 1, 2010, the ‘suntan tax,’ representing a 10 percent increase in the cost of doing business, took effect.4

4. Corporate franchise systems and multiple unit owners may experience reduced expenses in employee insurance premiums. According to the Congressional Budget Office, small businesses should expect lower administrative costs in their group plans, on average, resulting from more people in the system, electronic platforms for paperless processing and reduction of costly errors. With standardized plans, employee choices are simplified to price and provider. 5

5. Franchisors may see an increase in the number and diversity of new franchisees. With improved access and affordability of health insurance, the federal government expects greater

entrepreneurial activity from corporate executives who previously were reluctant to leave jobs with access to group health insurance. 6

While every franchise owner may have his or her political views on the Affordable Care Act, the above highlighted facts clarify some points that may be lost in the ongoing debate leading up to

the 2012 U.S. Presidential elections. Franchise decision-makers can take the appropriate action for their company’s best interests. Cheryl Swanson is a consultant with Franchise Workforce and has extensive human resources, benefits, insurance and financial services experience gained from market-leading companies: CNA Insurance, KeyBank, National City Bank (now PNC) and numerous top underwriters while with the Forrest T. Jones & Company agency. Complemented by five years of

franchisor marketing, distribution and operations experience, Cheryl’s background uniquely enables her to understand your human resource issues and to provide quality advice in tailoring outsourced HR solutions. Call 561-600-5554 or visit FranchiseWorkforce.com.

Elevate Franchise Success with Strategic Human Resource Solutions

1 www.NFIB.com 2,5,6 www.whitehouse.gov/healthreform 3,4 www.IRS.gov ©July 2012 Franchise Workforce