Sonoma County small businesses win extra year to comply with health reform

  • Sally Tomatoes Sous chef Jesse Sanborn prepares evening meals at the restaurant in Rohnert Park. California Governor Jerry Brown gave small businesses such as Sally's a one-year extension to comply with implementing the Affordable Health Care Act, Wednesday July 9, 2014. (Kent Porter / Press Democrat)

In January, Gerard Giudice and his business partner, Bill Pettibone, were faced with a difficult choice: Pay an additional $750 each month to add mandatory new benefits to their company’s health insurance plan, or drop their small group policy and send employees to purchase insurance on the individual market.

The owners of Sally Tomatoes, a restaurant and catering company on the outskirts of Rohnert Park, confronted a situation that thousands of small businesses throughout Sonoma County were forced to navigate — how to adopt health insurance policies that provide minimum levels of care defined in the Affordable Care Act, which fully launched Jan. 1.

“It would have been too expensive, so we dissolved our company plan and we each got individual plans,” Giudice said. “What were we going to do, lay that person off?”

Last week, Gov. Jerry Brown signed a bill extending requirements to comply with the federal health law for an additional year, giving more time to small business owners who, like Giudice, had expiring health insurance plans that did not meet federal standards. Now, employers with 49 or fewer employees have until the end of this year to make that difficult decision. Area business groups and insurance agents applauded the legislation, pointing out that the additional year will provide business owners much-needed time to understand health reform and buy the right insurance plan.

There is little consensus about whether the Affordable Care Act has led to skyrocketing premiums and steep hikes in out-of-pocket health care costs. Volatility in the insurance market is commonplace, even prior to the passage of the health care law. But here, in Sonoma County, business leaders and advocacy groups said they’ve seen price increases.

“In talking to some of my members, I’m not surprised to hear that their rates are going through the roof,” said Jonathan Coe, president of the Santa Rosa Chamber of Commerce. “Businesses are getting renewal notices and freaking out, but the fact that now they’ll get more time gives businesses time to reflect and choose the right plan.”

Senate Bill 1446, authored by state Sen. Mark DeSaulnier, D-Concord, goes into effect immediately and gives small employers additional time to consider offering new health insurance plans that meet all provisions of the Affordable Care Act, or extending their current plans one more year. Eventually all plans must provide minimum levels of coverage in 10 categories, including mental health treatment, birth control and primary care. Under DeSaulnier’s bill, California companies can renew their existing plans any time this year, but would need to find coverage that complies with the federal standards by Dec. 31, 2015.

“As a former small business owner and strong supporter of Obamacare,” DeSaulnier said in statement, the legislation will “help small businesses adapt to new components of health care reform.”

While Giudice and other small business owners who dropped their old plans to comply with the health law are too late to take advantage of the extension because they’ve already moved into new insurance policies, hundreds more companies in Sonoma County are expected to opt for the additional year, local insurance agents and business owners said last week.

Small businesses like Sally Tomatoes comprise the lion’s share of companies in Sonoma County — a staggering 97 percent of the county’s more than 16,600 businesses have 49 or fewer employees, according to the most recent data available. More than half of the workers in Sonoma County are employed at such companies, according to the state Economic Development Department, an agency that tracks California’s labor market.

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