With the firestorm around the introduction of Obamacare at least somewhat under control, focus is beginning to shift to the letter of the law itself. By now, we’re all fully aware of the political marketing and lobbying behind the bill, but now we also have a clearer picture of what the law will actually mean for real people. The new health care rules will have a substantial impact on employers across America, and since small businesses generally have the least infrastructure to deal with such an overhaul, they will likely be affected the most.
Obamacare transforms the health care landscape by essentially forcing businesses with 50+ employees to start offering affordable health care, or risk significant penalties. It goes without saying that Obamacare is a big deal for small-business owners, and although the biggest changes won’t take full effect until January, most proactive small business owners are already getting their houses in order.
So if you’re involved in a small business but have yet to really read into the specifics of the new health care law, read on. This is what the future holds for you.
1. Real talk: Do I really have to start offering affordable health care to all of my employees? And if not, what happens?
The answer is fully dependent on how big your small business is. Under the new law, businesses with 50 or more full-time employees (those who work more than 30 hours a week) must provide affordable health care to all of those full-time employees or else they will be fined at least $2,000 per employee not covered. If your business has yet to cross the 50-employee threshold, its not subject to penalties and you can offer affordable health care to your employees any way you see fit.
Some analysts (some might say cynics) predict that employers will stop offering health care to their staff members because absorbing the penalties could actually be less expensive than providing the coverage themselves, but regardless, those small businesses bringing on employee number 50 should be ready to pony up some extra cash. This doesn’t signal a revolution. A survey conducted by Kaiser revealed that more than 90% of businesses with 51 or more employees already provided health coverage to employees more than three years ago. So really, despite all the noise, the new rule affects only a small percentage of small business owners.
2. Escalating costs don’t sound good — Are there ways for business owners to circumvent Obamacare?
If you own a successful small business owner, you likely also have some savvy so … yes, there are ways to around the new rules. I'd recommend a consultation with a lawyer first. Even fans of Obamacare (yes, they do exist) concede that the new laws could result in reduced employee hours at businesses try to get under the “full-time employee” designation, reduced employee wages to offset rising costs, reduced hiring and company growth to avoid additional costs, and increased costs being passed on to the consumer.
3. So now the overhead at my 50-employee company is going to skyrocket. Any tips?
Well, Obamacare does at least try to help these businesses a bit, but whether this “help” will lower health care costs for all is up for debate (and one’s opinion is usually swayed by one’s political preferences on this one). Starting in January, small businesses with up to 100 employees can shop for health coverage on government-subsidized exchanges (assuming they start working). The government maintains that these exchanges will offer a wide spectrum of options that will ensure employers can find good health care coverage options at low cost.
Nevertheless, opponents of the health care proffer data showing the health care law will carve up the market into too many micro-sectors, causing reimbursement rates to increase.
4. So are any small businesses actually looking forward to the implementation of Obamacare?
Yes. The companies that will benefit the most from the new law are those with fewer than 25 employees. The legislators who pieced together Obamacare still of course want these businesses to offer health care to employees, though there will be no fines enforcing it — so they made the whole deal more attractive by offering short-term tax credits to small businesses with fewer than 25 employees that do offer health care coverage.
These businesses can get a tax credit equal to 35% of the employer’s premium contributions. That number climbs to a maximum of 50% the following year. These substantial tax breaks give small business owners with fewer than 25 employees the advantage of choosing whether to offer their employees health insurance. They are not subject to any penalties if they decide not to — but they could save money on taxes if they do.