Two Businessmen Explain How Obamacare Is Keeping Their Company From Expanding

Obamacare is acting as a disincentive for Virginia men Todd Hawkins and Jonathan Fishbeck to expand their home building company  in order to avoid the law’s mandate on businesses with 50-plus employees to offer health insurance.

The New York Times reports:

Since 2010, they have been building luxury homes in Washington’s Virginia suburbs. Besides those 21 employees, the company makes use of perhaps 100 or more subcontractors that Mr. Hawkins calls “teammates.” (Lawyers warn that businesses like BuilderFish that rely on subcontractors ought to tread carefully: They could find themselves subject to the mandate — and liable for penalties, even retroactively — should the Internal Revenue Service conclude that the subcontractors are actually misclassified employees. “We are very conscious of the trouble we could get in,” Mr. Hawkins said. “We’ve never done anything without our lawyer’s advice on that.”)

“We have been thinking about and dealing with the Affordable Care Act since we first heard about it,” said Mr. Hawkins, who added that he and his partner have wanted to offer insurance “from Day 1. We’ve wanted to insure ourselves.” But when they’ve looked at the math — first late last year and then again early this year — and repriced a completed project with and without health insurance, they concluded they could not absorb the overhead. “We’re already premium priced,” Mr. Hawkins said.

Instead, the company gives employees a lump sum they can use to purchase insurance if they so choose. (Mr. Hawkins would not elaborate on any of the calculations they’ve made to inform their thinking so far on offering health insurance — he said that nobody at the company could remember the exact figures.) But this arrangement may not last.

Mr. Hawkins and Mr. Fishbeck aim to transform BuilderFish from a company that, in addition to designing and building large houses and estates, manages every aspect of the finished property for the new homeowners. “You’ll have one BuilderFish rep that takes care of everything,” he said, from landscaping and maintenance to hiring household staff. The company has made a considerable investment in developing computer software to help manage the operation.

But without health insurance, he said, “you can’t attract the best employees. People are scared to take a chance if they don’t have medical.” For now, though, his advisers have told him to wait. “They say, ‘Nothing has changed, don’t do anything. Let others feel the pain while it works itself out.’”

But he continued: “We are big believers in spending money to make money. So when we get to the point where it will hold back our success, we’ll have to do it. At the end of the day, we’re going to have to shimmy out on that branch, but in the meantime we’re going to try to make do with less than 49 employees.”

Read the full report at the New York Times.