(Occasionally people who are clearly affiliated with one industry or another ask if they can submit posts to my site. If I agree with their industry’s stance, I say yes. I was therefore happy to publish Michael Cahill’s post about ObamaCare’s effects on small business.)
In just six months time on Jan. 1, 2014 the next part of the Obama administration’s landmark Patient Protection and Affordable Care Act (ACA) will become the law of the land. This phase includes the implementation of the individual and employer mandates, which not everyone is happy about.
The law aims to overhaul the entire healthcare system so that millions of uninsured Americans can finally have access to affordable and comprehensive health insurance. However that may not be good news for everyone.
Obamacare (in theory at least) will help customers receive better health insurance by through preventive care with no copays or deductibles, removing lifetime and annual limits, and providing tax credits. Experts predict though that small businesses, the heart of the nation’s economy, could suffer under the new law.
The employer mandate, a key feature of Obamacare, will force businesses with 50 or more full-time employees to provide health insurance to their workers or face a stiff penalty. There is speculation and already some anecdotal evidence that businesses are cutting workers’ hours or even laying them off to get around the 50 full-time employee mark.
Businesses have had it tough since the 2008-2009 economic crisis, here are five ways it could get worse for them next year under Obamacare:
1. I’m paying how much for insurance?
Small businesses have never enjoyed the same lower health insurance rates that larger companies have. From a business perspective this is understandable because of the risk involved in insuring fewer people.
Now though, with Obamacare people cannot be denied coverage or charged extra because of a preexisting condition. This mandate is helpful for Americans with chronic health problems, but economists have warned that this could cause a spike in premium prices next year.
According to a report from the Society of Actuaries release earlier this year, health insurance premiums nationwide could increase by as much as 30 percent.
Employers understand the importance of a healthy workforce, but the high cost of health insurance (which might go even higher) puts it out of reach for a lot of small businesses.
The delay of the Small Businesses Health Options Program (SHOP) in the majority of states deals another blow to small business owners looking for health insurance.
In April the federal government announced that the program would be delayed in the 33 states where they’ll be operating the health insurance exchanges. They will now be opening in 2015 in those states. Originally the plan was to launch the SHOP exchanges alongside the individual exchanges in 2014.
The program would have given employers access to an array of comprehensive and affordable plans from a variety of insurers which they could offer their workers. Essentially it was a health insurance exchange just for small businesses.
Since it won’t be available until 2015, employers in those states looking to buy insurance at the state exchange will only have access to a single plan.
2. Revenues have been declining
It’s no secret that the economy has been tough on small businesses for the past several years. Since 2008 Main Streets across the country have become emptier as businesses struggle to compete for fewer customers with less disposable income.
The employer mandate will no doubt add to this economic burden. The mandate requires companies with 50 or more full-time employees to offer health insurance or pay a penalty.
If a business subject to the employer mandates does not comply they face a penalty of $2,000 per employee minus 30. Which for a business right at the 50 employee mark is $40,000. Certainly not cheap.
Many employers are already looking for ways to cut their expenses or get around the mandate by reducing the number of employees or their limiting their work hours.
3. Navigating the labyrinth of buying insurance
You may enjoy shopping for clothes, but choosing a health insurance plan that fits your needs isn’t quite as fun. Now, just imagine being responsible for finding health insurance of an entire workforce.
Business owners already have their hands full just trying to keep the lights on. Throwing terms like deductibles, copays, PPO, etc. at them will only serve to exacerbate their business headaches.
Obamacare attempted to address this problem though the SHOP exchanges. However, as I said earlier, businesses in most states will have to wait until 2015 to take advantage of those.
4. 30 hours a week = full-time
While the employer mandate will only affect businesses with 50 or more full-time employees, the mandate might also apply to businesses with fewer full-timers who also employ some part-time workers.
Under the law, a full-time employee is anyone who works at least 30 hours a week. However, the working hours of part-time employees are also added up when determining the total number of full-time employees. For every 30-hour work week, one “full-time equivalent” employee will be counted.
So, if you have 6 part-time workers who work 20 hours a week each, they can be counted as 4 full-time equivalent employees (6 workers x 20 hours = 120/30 = 4).
The takeaway: if you’re an employer, you should know how Obamacare counts the number of full-time equivalent employees you have. You might be facing penalties and not even know it.
5. Small businesses are worried about Obamacare
According to a new Gallup poll, 48 percent of small businesses think that the new healthcare law will be bad for business, compared with just 9 percent who said it will be beneficial.
The same poll also shows that 55 percent of employers believe that their health care costs will rise. 52 percent expect the law will reduce the quality of healthcare benefits they provide.
Obamacare has no doubt already adversely impacted the economy as employers think twice about new hiring and expansion because of the mandate. The Gallup poll found that 41 percent of those surveyed said they’ve suspended plans to hire new workers, and 38 percent said they’ve held off plans to expand their businesses.
Some businesses are finding ways to skirt the employer mandate. Eighteen percent of businesses surveyed said they’ve cut back employee hours so they won’t have to provide health coverage.
Michael Cahill is Editor of the Vista Health Solutions blog. He has a degree in Journalism from SUNY New Paltz and previously worked as a reporter for the Poughkeepsie Journal and an editor for the Rockland County Times.