What do the up coming federal health care reforms mean for the mobile food industry but more specifically, your food truck business?
Will the Affordable Care Act add thousands of dollars in extra costs and more paperwork or will federal subsidies make this a “game changer” for small small food truck businesses that have struggled to provide insurance plans to their employees?
Who it will affect
The good news is that the Affordable Care Act (ObamaCare) will only negatively affect a minuscule number of existing food trucks. Food truck businesses with 50 or more employees (which includes less than a dozen food trucks in total) will have a choice beginning in 2014: they can sponsor a health plan for 100% of their workers or pay $750 per worker in penalties to the federal government.
For those truck owners, they might opt to take the penalty and do away with a health insurance benefit. Paying the annual penalty might be cheaper. So that would leave the employees uninsured and they would have to go to state health plan exchanges to buy health coverage that could be more expensive.
The vast majority of food truck owners won’t be required to offer health insurance starting in 2014, and therefore these mobile food companies won’t have to contend with possible fines like the big boys in the industry. But while vendors with 50 or fewer staff members would be exempt from coverage provisions, they will still have to contend with rising premiums.
If you are part of the almost 99% of food truck business who employ less than 25 or are self-employed, you may find that the health care reforms bring you some tax relief.
If you are a food truck vendor with less than 25 employees and pay the premiums for your staff, you will qualify for a tax credit up to 35% of their premiums. (In 2014, that credit could be as great as 50% of premiums if you arrange insurance via one of the Small Business Health Options Programs, or SHOP Exchanges). The tax break you get will depend on a couple of variables: the number of employees you have and their average pay.
Please note that this tax break won’t be offered to food trucks that are formed as sole proprietorship’s. This factor alone may cause existing sole proprietors to incorporate or become an LLC.
Insurance might become cheaper
The Congressional Budget Office estimates that the SHOP Exchanges could lower annual premiums for mobile food and other small businesses by 1-4% with a 3% increase in the amount of coverage.
If you happen to be a food truck owner that works for yourself, you will likely be able to take advantage of government health care subsidies in 2014. If you are self-employed in 2014 and earn less than four times the poverty level, you can qualify for these subsidies. (To give you some idea, 400% of the 2013 poverty level comes to $94,200 for a family of four.)