Questions Abound in Learning to Adjust to Health Care Overhaul
... One way to cover the costs associated with the new law would be to raise the price of each item sold about 4 percent and pass the costs along to buyers. “It’s ironic that our success meant we could grow,” Ms. Shein said, “and now we will be competing against smaller companies, with 50 employees or fewer, who will be able to charge less per item because they don’t have the financial burden of health insurance.” Prices are currently similar among local competitors, Ms. Shein said, and she says she believes the increase in her prices could affect her sales, possibly significantly.

Ms. Shein is considering a third option: outsourcing certain jobs to reduce the staff, because businesses with 50 or fewer employees will be exempt from the penalty. “We can outsource the cleaning and make the drivers independent contractors,” she said, “and we can cut the least profitable delivery routes, least profitable accounts or reduce the variety of items we create.” ...

Health-care law uncertainty grips Old Town Alexandria cafe — and other small businesses
...Whether he moves forward with expansion depends on the price tag of the requirements mandated by the Affordable Care Act, President Obama’s signature health-care initiative.

Manor’s company employs 45 people. If he brings in just five more, his business would soon be subject to new minimum coverage standards under the 2010 law — and he does not know whether his current health plan would meet this threshold of coverage or how his premiums might be affected.

“These changes are less than a year away, and I still have no information about how much our premiums are going to cost,” said Manor, owner of Bittersweet Catering, Cafe and Bakery. “It definitely gives me pause when thinking about adding another location.”

Nearly three years after the health-care law was passed, federal regulators have only recently begun to define its terms. Major pieces of the overhaul, such as state-run exchanges that will serve as marketplaces for qualified health insurance plans, have yet to take shape, and several rules remain unwritten. Consequently, the picture remains anything but clear for small-business owners, some of whom have been warned that their premiums may spike and that their current coverage may fall short.

“There is tremendous confusion and fear among many of my competitors and other business owners in my network, particularly about what you have to cover and how you have to report,” said Hugh Joyce, owner of James River Air Conditioning in Richmond. “In speaking to them, I am convinced that the primary reason we aren’t seeing a robust economic recovery is the uncertainty and costs associated with this health-care law.”...

Some Small Businesses Opt for the Health-Care Penalty
...Under the Affordable Care Act, employers with 50 or more full-time workers will be required to provide coverage for employees who work an average of 30 or more hours a week in a given month. An alternative to that mandate is for business owners to pay a $2,000 penalty for each full-time worker over a 30-employee threshold.

Mr. Levi currently spends about $140,000 a year on insurance premiums to cover 25 managerial staff at his business, Consolidated Management, which runs cafeterias at schools, offices and jails.

Under the new law, he will have to offer insurance to all of his 102 full-time employees starting in January. Assuming all of them take the coverage, Mr. Levi says the cost of premiums could exceed $500,000.

With companies facing ever higher health care costs, employers are now using real money, and sometimes penalties, to make sure their employees are taking responsibility of their own health. MarketWatch's Jim Jelter reports. (Photo: Getty Images)

"I've never made a profit in any year of the company that has surpassed that amount," says Mr. Levi, 62 years old. "I don't make enough money."

He says it makes more sense to drop insurance entirely and pay a penalty of about $144,000....