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Insurance & Liability

The Coverage Crisis

May 10, 2010 By: Glenn Haussman Night Club and Bar Magazine


Many Bartenders are Among the Nation’s Uninsured. Is There a Solution?

Hey bartenders, got insurance? Chances are you don’t, and you’re definitely not alone. According to the Center for Economic and Policy Research, 20 million working Americans have no health insurance. Sadly, a large number of those uninsured individuals are in the bar, nightclub and restaurant industry, comprising what many believe to be the industry’s dirty little secret.

As health care costs have skyrocketed, stories of uninsured bartenders and other staff facing medical crises have been forcing the issue out into the open. Fundraisers to assist severely ill or injured industry members are becoming more frequent and more industry groups are working toward providing reasonable health insurance to workers. Even after the signing of the health care reform legislation by President Barack Obama, the debate rages on, highlighting this complex problem and causing both owners and employees to wonder whether the legislation will solve this difficult issue (see sidebar).

It’s a no-brainer that everyone needs health insurance, but providing coverage as a benefit of employment gets complicated for bar, nightclub and restaurant owners living in a world of ultra-slim margins and even tighter profits, especially with high employee turnover rates. The bottom line is that most owners can’t necessarily afford to supplement health insurance coverage for their workers. Those behind the bar often think it costs too much to buy themselves and so, in many cases, they decide to go without coverage and assume invincibility. Having no coverage is a dangerous game because one fact remains: No one is invincible.

Yet, with no easy solution, what’s an owner or a bartender do?

“Dealing with health care has always been a sad state of affairs for the bar industry. There are so many people without access to health care industrywide that, unless you are with a national chain, you are essentially screwed,” says Jeffrey Morgenthaler, bar manager at Portland, Ore.’s Clyde Common.

Although Morgenthaler is lucky enough to receive coverage from his current employer, many bartenders aren’t as fortunate. “This is clearly an epidemic. The majority of beverage professionals don’t have coverage. No one is indestructible and you can’t foresee an accident,” says Bridget Albert, master mixologist with Southern Wine & Spirits of Illinois. For that reason, Southern Wine & Spirits, the United States Bartenders’ Guild (USBG) and other industry organizations often host fundraising events for ill or injured bartenders who are uninsured; the proceeds from events help pay medical bills. Modern Mixologist Tony Abou-Ganim’s 50th April birthday bash involves a donation drive for the Bartender Relief Fund (to donate, visit usbg.wordpress.com; donations are accepted through the end of May). 

While these events help individuals, they don’t solve the larger issue, Morgenthaler says.

“Fundraisers are great when you break your back or need urgent care, and they throw you a fundraiser, but that isn’t enough. The real question is how can you [offer health coverage]? The margins are so tight, places can’t afford to give people health care, or they have to pass charges along to customers,” he says. The problem, he adds, is particularly acute for those desiring to make the bar business a lifelong career.

New Options

A few years ago, gaz regan, author and founder of the worldwide bartender database and ardent spirits, tried to form a group to provide health insurance to anyone in the hospitality industry who wanted it. He spent more than a year trying to put together a program and spent tens of thousands of dollars on the effort, but, at the last minute, the underwriters pulled out and the entire plan fell through.

“We are all in the same boat and need to figure out some way to get health insurance. I didn’t have health insurance for many years until I realized I was an idiot,” regan says. Good thing, too: In 2003 he became seriously ill and insurance saved him from tearing through his life savings.

Fortunately those leading USBG think they have a solution. After years of fine tuning a plan and seeking out the best coverage possible for industry employees, USBG now offers a variety of health insurance plans to its members through Homeland Healthcare for as low at $77 a month for a single person needing minimum coverage; other plans cost up to $199 per month. Family rates are between $189 and $514 a month, and those with preexisting conditions are automatically approved.

Livio Lauro, national president of the USBG and resort district manager for Southern Wine & Spirits of Nevada, says he has been trying to get a program into place since he started as the organization’s president in 2005. “We knew this was an ongoing problem, and we had to overcome this. We realized it was unbelievably difficult to do, but we figured it out,” Lauro says. “This is a really big deal for us.”

Operator Assistance

Some operators do provide coverage to employees, and likely more will have to once the new health care law goes into effect (see sidebar). The Nyman Group, a Scottsdale, Ariz.-based consulting, management and executive search company for the hospitality and restaurant industry, offers coverage to many restaurant and bar employees. In general, employees who have been with Nyman Group (and some of its bar/restaurant clients; coverage is offered on a state-by-state basis) for at least a year are usually rewarded with insurance benefits.

Nyman encourages businesses to offer employees coverage if they can afford to do so. It’s not only the right thing to do for employees who have been around for a while; it’s a great loyalty engendering benefit. “We believe a person will feel more comfortable with some type of benefit program,” says President Robert J. Nyman. “You have someone who is a good employee, properly trained and understands the system, so it is the logical way to reward while also building their loyalty to the company.”

As far as coverage specifics, Nyman’s employees are looking for a program that allows them to continue with their current primary caregiver, provides medical clinic access for when they can’t reach that doctor and a prescription plan. Life insurance is irrelevant to many in the industry, he says, as many employees are single and in their 20s.

The jury is still out on the impact of the health care bill on bar and nightclub operations, as it mandates coverage must be provided by employers with 50 or more workers. While regan would like to see more owners provide insurance, he knows it’s not practical because of the high rate of health coverage costs. “Owners are people trying to put food on their table. Many small business owners cannot afford to offer it. But we are all in this together,” regan says. With the USBG offering, member bartenders now have an option, but servers and other hospitality employees — and their employers — still face a daunting challenge. NCB


What Health Care Reform Means for You

The health care reform legislation that was signed into law in March likely will go down as the most sweeping legislation of this generation. But because it is so widespread, its effects are both unknown and misunderstood.

At The Nyman Group, a Scottsdale, Ariz.-based consulting, management and executive search company for the restaurant and hospitality industry, President Robert J. Nyman says many owners don’t yet understand the impact of the new regulations that will be rolled out during the next five years as part of the health care reform law.

“I don’t think the restaurant and bar industry has fully digested what the current program [will be regarding] insurance. When I talk to people, they are waiting for the government to share the rules of the road, so rather than rushing to put in a plan, people are waiting,” says Nyman, whose company just debuted Aperitif Restaurant & Bar in Woodbury, Minn.

Many of the bill’s provisions will not be implemented until at least 2014, but some elements will be applied by the end of September, including:
•    Children can stay on their parents’ insurance policies until age 26.
•    Small businesses receive tax credits to assist with buying insurance for employees.
•     All new policies cover preventive care, including annual physicals.
•    Insurance companies can no longer drop insured people when they become sick.
•    Businesses with fewer than 50 employees will receive tax credits covering 35 percent of their health care premiums; this amount will increase to 50 percent by 2014.

By 2014, companies with 50 or more employees must offer insurance coverage to employees. If they don’t, they must pay a $2,000 penalty per employee per year, with the penalty waived for the first 30 employees. If an employer offers coverage but employees still receive tax credits, employers must pay $3,000 for each worker receiving a tax credit.

—Emily Hanna Mayock


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