Alisia Kleinmann loves restaurants. But the benefits?
“They are the one thing about the hospitality industry that really sucks,” Kleinmann said.
So last week, Industree, Kleinmann’s new D.C. hospitality trade group, opened a health exchange for D.C. area restaurants and bars. Kleinmann, president of Industree and a former meeting planner and personal chef, said the private exchange will help local restaurant groups with more than 100 full-timers comply in time for the Affordable Care Act’s Jan. 1 deadline to offer health coverage. Enrollments will go into effect in August.
But how does someone with a hospitality background coordinate a private health exchange? As many stories in the restaurant industry often go, it started with a meal. Fellow members in the industry were asking what they were going to do to afford coverage and talking about how they’d be able to join forces to get better rates, Kleinmann said. In early 2013, while she was still working at Matchbox Food Group, she earned certification to be an insurance broker, she said. She connected with M&T Insurance Agency, a subsidiary of M&T Bank. They worked with Liazon, a company that operates other exchanges, for the technology that runs the online platform.
Kleinmann said she jumped on a plane to Buffalo to meet in person with M&T Insurance and present a wish list for the kind of coverage restaurants could offer their employees. What resulted was an exchange she compared to an “online store.”
“We stocked the store shelves with negotiated plans specifically for this industry,” she said.
The private exchange will enable employees to pick a health plan from a group of options using the cost-sharing subsidies from the restaurants they work for. There will be bare bones so-called “skinny plans” ranging anywhere from $61 to $92 a month, as well as up to 20 full coverage plans from large insurers like Aetna and Cigna, Kleinmann said. Those plans could range between $175 and $425 a month depending on what a worker selects.
Some of the considerations for the rates: There are a high number of young people who get paid $10 an hour and who are more likely to be healthy, but there are still plenty of older workers with families who’ve made a career of restaurants and make $100,000 a year. Restaurant employees are often much more active than the average worker, but might be more likely to smoke and work in kitchen environments where they could be potentially injured. They work a variety of hours and would need expanded customer service hours if they needed extra help signing up.
If successful, they’ll be tapping into a potentially massive market. A white paper produced by Georgetown University researchers with the National Restaurant Association found one in 10 people in the U.S. workforce is employed by a restaurant, and 43 percent of them are under 26 years old.
“Many of them are young, many of them are part-time, many of them are transient and whether they be immigrants or young people who are just getting their start, many are in first jobs that are important entry into the workforce,” the white paper notes. “Many of these restaurants, whether they be chains or independents, want to do the right thing by their employees.”
There is a risk for restaurants with more than 100 full-time employees that do decide to opt for those “skinny plans.” While they can use the plans to offer at least some minimal coverage and avoid the $2,000 Obamacare penalty, they risk a potentially larger penalty if any of their employees opt to join public exchanges, according to Forbes. If a business that is required to offer coverage doesn’t meet all of the minimum ACA requirements, they face a fine of $3,000 per employee.
Kleinmann hopes to expand the exchange to include local associations, such as those representing food truck operators or incubators.
“To me, I don’t know why you wouldn’t put your business on this platform,” Kleinmann said.