Obamacare Will Affect Dealerships in Different Ways

When the Supreme Court upheld the Affordable Care Act, the National Automobile Dealers Assn. called it a “flawed law.”

Regardless, the act now is the law of the land, says NADA Chairman David Westcott. So, NADA is helping dealerships comply with it. 

The trade group is holding workshops on various aspects of the health-care law, but it is complicated. Dealers may need to seek outside help.    

“There is no one solution that fits all,” says Westcott.  “Dealerships are all sizes. It is up to the dealer to go back to his or her insurance experts and determine what is best for them.”

The average dealership has 55 employees, and under the new law all businesses with 50 or more full-time employees must provide health insurance beginning in 2015 or pay a fine. Full-time is defined as working at least 30 hours a week. 

A lot of dealerships are considering not offering insurance, says Westcott.  In some cases, the fines would be less. “But then comes the competitive aspect,” he says. “You want to take care of your employees and keep good people.”  

The requirement to offer part-time employees coverage may give dealerships fewer hiring options, however. 

Danny Wilson, dealer principal at Wilson Toyota in Ames, IA, says he may have to stop hiring students in his college town to work part-time, even if they want to work full-time during summers. “I’ll have to look at that very closely,” he says. 

But he doesn’t expect a huge business impact from so-called Obamacare.

Wilson Toyota, which employs 77 people, has provided 100% health coverage since 1981. 

“We have taken the brunt of insurance costs for years,” says Wilson.  “We have decided it is the cost of doing business and retaining new employees.”

The new law could help dealerships save money on health insurance. Starting in 2014, employers with wellness plans and anti-smoking programs are eligible for rewards of up to 50% of the cost of the plan.

Such health programs already have cut insurance costs at Carter Myers Automotive of Charlottesville, VA. The 13-franchise group offers health insurance to 80% of its 400 employees under a health-maintenance organization plan that includes wellness and anti-smoking programs. 

This year, the group’s insurance plan cost was reduced 6% because of the programs, says dealer principal Carter Myers. 

His group’s health-care plan will require a few changes under the new law, he says. For example, the plan currently has a 180-day waiting period before someone becomes eligible for health benefits. The ACA limits waiting periods to 90 days.

Myers figures his business can handle the new requirements without much trouble. “I have a human-resources person who is pretty dedicated to keeping our program right,” he says. 

Dealerships with fewer than 50 full-time employees are not required to offer health benefits under the new law. But they may want to check out options at their state’s health-care exchange or at the Small Business Health Options Program at healthcare.gov anyway, says Paul Fronstin, director-health research at the Employee Benefit Research Institute in Washington.

“If they go to the exchange, they may be able to offer more plans to employees. That is good for recruitment and retention,” he says.