Wednesday, August 13, 2014

How small businesses are grappling with the Affordable Care Act a year later

Last October 1st, the website for the Affordable Care Act healthcare exchanges premiered, and many small business owners hoped that the new system would provide some relief for the staggering costs healthcare insurance was laying across their shoulders. Unfortunately, the website rollout performed more poorly than expected and the implementation of the new healthcare law - and any relief it would give small businesses - was significantly delayed. Because the website didn't function, not enough people were enrolled by the target date in December, and the administration pushed back numerous deadlines and weakened compliance regulations. How this will play out for individual business owners, we will only discover with the passage of time and as the effects of the new law come down this compromised pipeline.

At this time the requirement that small businesses must provide insurance coverage to their full-time employees only applies in 2015 to businesses that have 100 or more employees (full-time being defined as working an average of 30 or more hours per week). The cost of this insurance must also be less than 9.5 percent of their income. Businesses have the option of providing their full-time employees with coverage or paying a per-employee assessment fine. In 2016, businesses with over 50 full-time employees will have to be compliant or face paying the fine.

Since 96 percent of U.S. businesses have fewer than 50 full-time employees, most small businesses will not have to worry about Affordable Care Act compliance for the foreseeable future, although many businesses have cut either hours or workers in anticipation of the higher costs to them either way. Ironically enough, many government jobs in schools, city government, and libraries have also been cut because of budgetary constraints.

Meanwhile, the costs of both healthcare and health insurance continue to climb. Many employers already offer their workers insurance benefits and are finding it challenging to pay higher costs in an economy that continues to stagnate. Many of these are choosing to offer lower-cost, higher-deductible plans to their employees. Thirty-two percent of firms will only be offering high-deductible plans, shifting more costs to their workers. As long as workers are offered the option of a plan that meets Affordable Care Act guidelines, businesses will not have to pay a fine - regardless of whether employees choose to enroll in these plans.

Some employers are offering incentives for workers who voluntarily shop around for cheaper healthcare options or who take part in lifestyle betterment programs or utilize their preventative care more. High cost, high benefit programs will be taxed beginning in 2018, so employers who have provided their workers with "Cadillac" plans have incentives to either educate their workers on the costs of these plans or slowly transition them to new health insurance realities.

Other businesses have decided to forego offering insurance altogether and pay the fines which are less expensive than the cost of health insurance. As yet there is not consensus on what the best options are as the administration continues to delay mandates and economic conditions change.