Five Reason to Reconsider Health Insurance for your Small Business
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By Michael Cahill
The unintended effects of Obamacare
On Jan. 1, 2014, President Obama’s Affordable Care Act will fully take effect, and whether or not it’s the right move for the administration remains to be seen.
The new law aims to provide affordable and comprehensive healthcare to millions of uninsured Americans and revitalize the nation’s healthcare system.
The law, more well-known as Obamacare, looks to benefit Americans with lower incomes who don’t get health insurance through their workplace.
However, Obamacare won’t be helping everyone. Small businesses, which have long struggled to find and keep affordable health insurance policies, may suffer even more under the new law.
Obamacare will provide coverage to millions of workers through the employer mandate. This will force businesses to provide health insurance to their employees or pay penalties.
Some experts argue that employers might just be better off dropping their workers’ coverage and letting them purchase insurance from one of the health insurance exchanges. Here are five reasons why that might be a smart move:
1. Big money for health insurance
Small businesses have been feeling the burn of a slow moving economy for several years now. Employers are concerned about raising their bottom lines in order to stay in business, and asking them to offer health insurance to their workers will only add to the burden. Sure, businesses will benefit from offering health insurance to their workers but only if they can afford it.
With so many mandates and requirements included in the new healthcare law, many experts predict that insurance prices are going to skyrocket next year. Small businesses will see the biggest increases because they don’t have the same bargaining power as larger firms when negotiating rates from private insurers.
An announcement by the federal government in April further added to small businesses’ woes – the opening of the Small Businesses Health Options Program, which would allow small businesses to purchase more affordable health insurance and provide their employees with a choice of plans, will be delayed until 2015 in 33 states. That delay will likely make insurance plans available to small businesses next year more expensive.
2. Penalties vs. Profits
Small businesses with 50 or more employees that fail to comply with Obamacare will face certain penalties according to the new law. Those who are already suffering because of the economy will no doubt see their profits slip even further.
If a small business of 50 or more full-time workers does not offer health insurance, they’ll have to pay a $2,000 penalty for every worker on their payroll over a 30-employee threshold.
For some businesses, depending on their size, it might make sense to drop coverage and just deal with the penalty. For others closer 50 employee mark, the smarter move might be to lay off employees.
Both options are not fantastic, but it’s just another way that Obamacare has pushed small businesses into a corner.
3. The complexity of buying health care
Businesses already have so much to worry about and choosing the right plan for their business might just put their to-do list over the edge.
Navigating different plans with different premiums, co-pays, deductibles, benefits, etc. can be one of the most confusing activities that you ever engage in. The internet has made this easier, but it’s still time consuming, and when time is money, well you understand where I’m going with this.
Plus the delay of SHOP exchanges is expected to cause further problems for small businesses as they look for other ways to get a find a better deal on health coverage.
4. Definition of full-time vs. part-time workers
Small businesses with 50 or more employees are subjected to the employer mandate under the ACA. However, the law does not define full time worker as simply someone working at least 40 hours a week.
The federal government defines a full-time employee as somebody who works 30 or more hours each week. So, an owner who employs less than 50 workers can actually have more than 50 full-time employees and be subject to the mandate.
How can this be? When counting the number of full-time workers, part-time hours are taken into consideration. For example, if you have 4 part-time workers who log 25 hours each week, they’ll be counted as 3 full time employees because of the 100 hours they clock collectively.
5. Public awareness of Obamacare
Obamacare still has a long way to go in terms of public relations. The problems aren’t necessarily because of bad press, but just of simple awareness.
Fewer than six in ten Americans know that Obamacare is still law; seven percent think the Supreme Court overturned it, and 12 percent believe that Congress has repealed it, according to a poll by Kaiser Family Foundation.
Those numbers are likely to create a fair amount of confusion, which will no doubt lead to even more problems implementing the law next year.
Obamacare may have had the best intentions, but the end product will be catastrophic for a lot of people, especially small businesses. Not only will they likely pay a lot out of pocket to provide coverage for their employees, some might even end up closing shop.
Michael Cahill is the editor of the Vista Health Solutions blog. Follow him on Twitter at @Vistahealth