Confusion Abounds on Health Care

LOS ANGELES — Nine months before the Affordable Care Act goes into effect, many footwear players are struggling to determine the best course of action to comply with the law.

Beginning in January 2014, the legislation will require all individual Americans to obtain health insurance or be subject to a fine. Businesses with more than 50 full-time employees will be required to offer health insurance or face a penalty. Smaller businesses with fewer than 50 employees are not required to provide insurance, though the issue still must be settled so employees will know whether to look elsewhere for their personal coverage.

“There is an awful lot of conversation out there,” said Chuck Schuyler, president of the National Shoe Retailers Association. “The problem is everyone is talking, but nobody really knows what to do.”

Some retailers said that sorting through the myriad rules, regulations and unclear language in the law has made compliance a more challenging issue. Also complicating the situation is an expectation that the fine print of the law may change prior to full implementation next year.

“I suspect there are going to be a lot of changes to the law by the time it goes into effect, so I don’t know if there is going to be any clarity for a while,” Schuyler said.

“Everyone has a wait-and-see approach,” added Matt Priest, president of the Footwear Distributors & Retailers of America. “There are going to be a lot of [cost] calculations, and then there is the PR piece and the [employee] retention piece. Until Jan. 1, I don’t know that we’re going to know what it all means.”

Ed Habre, president and CEO of Portland, Ore.-based Shoe Mill, said he has always offered insurance to his employees, but even so, ensuring he is in compliance with the specifics of the law is proving to be daunting. “This is a complex issue that in many ways lays a heavy burden on small businesses,” he said. “We have had meetings with our insurance reps and viewed countless online seminars and we are trying to prepare in the best way possible, [but] there are so many unanswered questions.”

One area that remains unclear to Habre is the issue of an employee’s spouse’s documentation of income, a component used to verify compliance. “There are certain benchmarks that have to be met that require information that we don’t possess. We’re going to have to carefully procure that information, and then there is the issue of privacy,” he said. “The problem is there aren’t enough specifics. It puts us in no-man’s land for a period of time.”

Linda Hauss, executive director of the United Shoe Retailers Association, said she sympathizes with Habre’s plight. “Nobody really understands [the law], even insurance people,” she said.

Hauss noted her outside insurance expert is working on assembling an information packet that will be emailed to members to help them navigate the law. “It’s definitely something people are going to need help with,” she said.

Priest said his association held a summit two years ago after the bill’s passage to educate members on the implications of the Act, and the organization also has partnered with the U.S. Chamber of Commerce on a booklet of information about the law, which is available to members. “We’re not reinventing the wheel because our industry is not unique in terms of the impact of this law,” he said.

Still, in some cases, company executives said they aren’t concerned about the law since they already provide health care coverage for full-time workers.

“I don’t follow it that closely. … We provide health care for all our workers … and we’ll do what we have to do,” said Craig Blattberg, owner of the three-store Diane B chain in New York.

Similarly, David Jassem, owner of David’s Shoe Salon in Beverly Hills, Calif., said it has always been a priority for him to offer health coverage to staff. “For full-time employees, we’ve always had a health care plan,” he said. “I can’t tell you I’ve planned anything out into 2014, but it’s important for everybody to have health care … and we offer that.”

Other executives observed that the health care issue has changed the landscape of the insurance businesses, forcing them to reexamine the benefits they offer to employees.

“We brought in a consultant to review it all because costs are going up,” said Chinese Laundry CEO Bob Goldman. “We’ve had to change health care carriers and make some modifications. We’ve always offered our employees insurance, but we had to make sure our people get the most for their money.”

Joe Ouaknine, CEO of Titan Industries, also said his advisers have told him to expect significantly higher costs. “The only thing I know for sure is that it’s going to cost us more money,” he said.

David Z owner David Zaken is relying on an outside expert to ensure compliance. “They are up to date with everything that is necessary and they’ll show us what needs to be done,” he said.

Priest added that he expects footwear executives from across the industry to be more active in seeking answers. “As we get closer to Jan. 1,” he said, “we’ll be getting a lot more requests for information.”

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