ALBANY, N.Y. — Restaurant owners Colleen and Tim Holmes were considering opening a third business in a growing upstate New York suburb but decided against it. One factor was the risk from expanding their staff beyond 50 full-time employees and having to provide them federally mandated health coverage.

Despite knowing the penalty for that part of the Affordable Care Act had been postponed for a year, the couple said their margins are thin and the requirements and costs under the law remain unclear.

They also face some disruption from their current health plan, with some coverage moving to the new insurance exchange after this year. They’ve discussed whether they need to hire a consultant to help them understand what the law means for the owners of small businesses, but it’s an expense they’d rather not have. Yet they have little time to research the act on their own, since they already work more than 70 hours a week.

“As small-business owners we take all the risk and we employ a lot of people, so any additional cost is difficult for us to justify without having additional revenue,” Colleen Holmes said.

Even though they offer health insurance, the couple said most of their employees refuse it because of the cost of premiums and because most are young and feel they don’t need it or can now get coverage under their parents’ policies through age 26.

At costs ranging from $300 to $500 a month for one healthy employee, the business could not afford to pay a fraction of the premiums, they said. At even $100 a month, it would be $5,000 monthly for 50 workers.


“Where’s that money going to come from?” Colleen Holmes said.

Her husband said it would be more advantageous for their employees to go directly to the new health exchange for individual coverage because it can be subsidized by the government.

Since 2004, they’ve owned and operated Wheatfields Restaurant and Bar in Saratoga Springs, an upscale city with a thoroughbred track, performing arts center and Skidmore College. In 2009, they opened a cafe in the nearby Albany suburb of Clifton Park and more recently considered opening a third restaurant in between in Malta, a town that’s been growing with a new semiconductor manufacturing center.

“There’s a lot of other issues out there, but the health care definitely made us re-evaluate our business strategy in expanding,” Colleen Holmes said.

Another was New York lawmakers this year boosting the state’s minimum wage, which will rise incrementally from $7.25 an hour to $9 an hour in 2016.

In addition to the New York health exchange, a separate one will serve small businesses, defined as having 50 or fewer eligible employees. Many owners expect to rely on brokers to help them find the best deal.


The definition of a small business will increase from 50 to 100 full-time employees in 2016 in New York, expanding access to the state-run exchange and possible tax credits for providing coverage.

However, businesses with 50 or more full-time staff still will be required to provide affordable coverage or face tax penalties, which start in 2015. Employee premiums cannot exceed 9.5 percent of gross income.

Several city and regional chambers of commerce, which have traditionally offered pooled insurance coverage for small businesses, plan to continue. However, sole proprietors now will have to go to the exchange.

For now, the Holmes and other small-business owners are trying to understand the law’s effect on them and their employees, as well as figure out what the related costs might be.

“When you can’t pinpoint your costs,” said Tim Holmes, “you can’t make strategic decisions regarding your business.”

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