Small Businesses have been cited by the White House as the ‘backbone’ of the United States Economy. That backbone of 28 million small employers saw dramatic changes October 1, when the Health Insurance Exchanges opened, giving way to a new era of Health Care in the United States. So how exactly will the Affordable Care Act, which takes full effect on January 1, 2014 affect the ‘backbone’ of the US Economy? Here are 5 ways America’s small businesses will be affected by ‘Obamacare.’
First and foremost, the Affordable Care Act provides for every single US citizen to purchase Health Insurance of some form or another come January 1, or else face hefty fines. This is the first step in what is expected to be a long, long road to nationwide coverage, along which businesses, big and small, will have a major role to play.
Come January, big businesses (50 employees or more) will be legally obliged to provide health insurance or pay a tax of $2,000 per employee (for all but the first 30 employees) starting January 2015. Smaller businesses (less than 50 employees) will also have to provide health insurance but will not be subject to fines, provided their employees get tax credits through an exchange. For small businesses with less than 25 employees, a tax credit of 35% will be made available to contribute towards health insurance provision.
The Affordable Care Act will also create new incentives promoting workplace wellness programs, encouraging employers to take greater interest and more opportunities to support the health and well-being of employees. Funding will be provided as part of this preventative measure which has already been embraced by many businesses nationwide.
A study titled ‘Employee Benefits: Today and Beyond’ which surveyed US businesses found that: “almost half of employers (44%) are already increasing the use of wellness programs to improve the health of employees. Among these companies that have already implemented this approach, 33% have been very successful in achieving their desired cost savings.”
The Affordable Care Act will allow Businesses with workplace wellness programs, effective after 1, 2014, an tax credit increase of up to 20%, and a further 10% of the cost of health coverage if programs are designed to prevent or reduce tobacco use.
New Tax Credits
As mentioned above, one of the key factors in the implementation of the Affordable Care Act is the introduction of new tax credits, designed to help make Health Insurance readily accessible to US citizens. This includes tax credits for Businesses, aimed at helping employers provide coverage for employees.
The small business tax credit, for example aims to help businesses with less than 50 employees afford the cost of healthcare coverage. The Affordable Care Act aims to raise this tax credit to 35% for by 2015 for businesses that purchase coverage through the SHOP marketplace which opens October 1.
Those SHOP (Small Business Health Insurance Options Program) Marketplaces will offer Small Businesses a portal through which to shop for health coverage on a competitive marketplace. These marketplaces include web portals that provide standardized, easy-to-understand information, making comparing and purchasing coverage easier for businesses.
The new SHOP Marketplaces will also allow small groups to pool risks and reduce administrative complexity and subsequently increase their purchasing power while reducing costs.
All that said and done, the Employer’s Mandate has now been pushed back to 2015, so Businesses will not feel the full effects of the Affordable Care Act for at least another 18 months. Instead, the initial Health Care Reform procedure will be regarded as ‘real-world testing’ ahead of full implementation in 2015. This has caused an increased level of doubt among critics and supporters of how Health Care Reform will take full shape, if at all. Businesses are now in a state of concern thanks to mixed messages. While employers may have initially felt relieved that they would have more time to fully prepare for the introduction of the new legislation, President Obama has hinted that fines could swell for Companies that view the Employer Mandate delay as a let-off.
To conclude, this shroud of uncertainty should prompt employers to consult their Insurance Agents about the Affordable Care Act, its provisions and what it means for their business. The facts are there, it is now up to Businesses to assess the situation and consider what the best Insurance option for them instead of treating the Employer’s Mandate delay as a let-off.
If you are unsure of how the Affordable Care Act will affect your Business, or if you’re unsure of what to look for in the SHOP exchanges, speak to an expert directly for free.