Obamacare is real; it's time dealers made plans
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Few pieces of legislation in recent years have triggered as bitter a debate as the federal Affordable Care Act, the national health care plan. Indeed, many small-business owners hoped that a Republican victory in last year's election would set the stage for repeal of the legislation.
But President Obama won re-election, with a Democratic majority in the U.S. Senate, making it hard to see how repeal would be possible. Realistically, auto dealers who hoped for repeal need to develop a plan to deal with Obamacare when major portions of the law go into effect Jan. 1.
That's why it was distressing to hear at the recent National Automobile Dealers Association convention that many dealers still haven't come to grips with Obamacare. Dealers need to weigh their options under the new law carefully to determine the best path for them next year. Given the complexity of the new law, they need to start doing so soon.
For many, the decision will involve weighing the costs of providing health care coverage vs. the penalties for not doing so. Another consideration: possible benefits in employee recruitment and retention.
It's likely to be a difficult decision. For one thing, costs are still unclear. States are still forming plans for health insurance exchanges that will enable employers to find competitive plans. It is uncertain when many of those details will become obvious or when costs will become more readily apparent.
Many dealers are on the cusp of being affected by the new legislation. The balance point of Obamacare is 50 employees. Employers with 50 full-time employees are required to provide health care insurance as of Jan. 1.
NADA estimates that the average dealership in the United States last year had 52 employees -- but that figure may include part-timers.
The effect of the legislation will be a load for dealers to juggle, depending on the size of their dealerships. Dealers also will have to grapple with the unknowns surrounding future state decisions as well as what Congress decides moving forward. It is a complex decision.
In a worst-case scenario, dealers are looking at margins that are narrowing even as the legislation is taking shape.
These are small businesses making a very important decision under complex and changing circumstances. But this much is clear: Wishful thinking isn't a strategy.
In preparation for this legislation, retailers should get a plan together, analyze the alternatives and face the reality that the business climate will change when Obamacare takes full effect.
