What Can Small Businesses Anticipate With Health Care Reform On The Way? Well, That Depends...

from the Ch-Ch-Ch-Changes dept

After a long Congressional battle, the health care reform bill passed the House last weekend and has left many small business owners wondering what will happen to them. Not all of the details have been brought to light, in part because of the reconciliation process that's gone on this week. This is somewhat frustrating, since there's basic approval of a bill without all of the important details -- but there are a few that are immediately clear. First off, small businesses with less than 50 employees will be exempt from requirements to offer health insurance. Companies that are a bit larger and getting close to 50 employees should make sure they can document exactly how they count employees and full-time equivalents (FTE). The number of employees will determine the amount of tax credits (or penalties) for offering (or not offering) health insurance.

So where will all this insurance come from? By 2014, the federal gov't requires every state to set up a Small Business Health Options Program (or SHOP Exchange), so that small businesses can "pool together" to buy insurance plans. If a state fails to set up a SHOP Exchange in time, the federal gov't will provide one of its own. Still, there's four years to see what a SHOP Exchange will actually look like -- and many predict that these exchanges will start sprouting up before the end of this year.

In the short term, there are some tax credits that small businesses may have available this year, which they should certainly be looking to understand -- rather than waiting around. But, on the whole, small businesses may not be required to do anything differently -- and might optimistically benefit from the insurance plan competition generated by the SHOP Exchanges. For firms that have around 50 employees, it's a smart time to start crunching the numbers and to try to forecast what the financial pros and cons are for providing coverage and obtaining tax credits vs. paying fines and letting employees handle their own insurance. Besides the financial impact, business owners should start planning now for consequences such as a reduction in "job lock" -- instead of assuming they can deal with managing their employees' benefits in less than proactive way. With the economy supposedly picking up, employers may see less loyalty from employees and a different view of health care benefits.

In the long run... well, there are still some factors that could change the final outcome of this reform. Thanks to the reconciliation process, some of the language of the bill has been shifting -- and who knows what happens after the next election cycle (and, of course, the one after that). While some had said getting health care reform finalized (one way or the other) would at least be good for certainty, there's very little certainty at all at this point for small businesses, and this game of political football looks like it will continue to be played and many of the provisions don't come into effect for a few years. At best, it seems like small businesses need to at least pay attention, but not do anything too drastic just yet.

In the meantime, while we wait for the politicians to argue it out, it would be great to hear from any small business owners here, concerning their own experiences in dealing with health care for employees, or suggestions for how the system could or should be improved.


Reader Comments (rss)

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  1.  
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    william (profile), Mar 25th, 2010 @ 6:21pm

    i wish i could...

    i have run a couple of small (6 - 25 people) businesses for about 7 years now. they are tattoo shops... every year we go through the same thing, someone wants health insurance and we all look all over the place to see what we can do. i very much wish that i could cover at least SOME of the cost for these folks but any amount i put into it is either worthless to them or totally unfordable for me. i would love for there to be a way to get my people covered, i guess i just have to wait and see if this bill is it. ...i'm not holding my breath...

     

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  2.  
    identicon
    john, Mar 25th, 2010 @ 8:16pm

    I own a small business

    I own a small business. We have 5 employees. we gross about 1.3m

    Yesterday, I told all of them that their bonuses were cancelled indefinitely in lieu of higher anticipated costs.

    We have always provided and contributed to individual coverage for them, and we were satisfied with the plans. Now, we anticipate individual coverage premiums to skyrocket, along with our taxes on dec 31, and possibly in 2011 with the 3.8 medicare increase. I estimate that most people know nothing about such details. and this will come as a surprise to them

    Any business owner with half a brian is going to revert to survival mode. I can guarantee you that you will not see a jobs increase from this bill - but rather a jobs/wage drop over several years because of this legislation.

    I would rather downsize, and get below the 250k threshold, than deal with new rules, regulation, and fees for my hard work, stress and risk.

    I sense I am not alone.

    This... is what change looks like.

     

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  3.  
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    Mike Masnick (profile), Mar 26th, 2010 @ 1:49am

    Re: I own a small business

    Hi John,

    Thanks for the comment... I'm hoping you might expand a bit...

    Yesterday, I told all of them that their bonuses were cancelled indefinitely in lieu of higher anticipated costs.


    Which costs are you concerned about specifically? Since I also run a small business, I would like to understand this better. To date, I haven't seen any indication that our costs will actually be higher.

    Now, we anticipate individual coverage premiums to skyrocket

    Why would the premiums skyrocket? The indications I've seen are that they might get more reasonable, as small businesses will now be able to team up to buy.

    I would rather downsize, and get below the 250k threshold, than deal with new rules, regulation, and fees for my hard work, stress and risk.

    Again, would be great if you could detail these new rules and fees -- because I haven't seen them yet and it would be good to understand them.

    Thanks!

     

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  4.  
    identicon
    chiropractic, Feb 8th, 2011 @ 1:16am

    chiropractic

    Thanks in advance for your cooperation with the above conditions. I hope you find it useful.It helped me with ocean of knowledge so I really believe you will do much better in the future I appreciate everything you have added to my knowledge base .The immediate impact is already being felt. Uncertainty in terms of how reform will impact businesses has already resulted in delayed business decisions, including hiring for small businesses, which will also likely be a factor delaying recovery. "All the business people I have talked to, employers of almost any size, say health care expenses are a huge problem," Blosser says. "I am talking from an employer's point of view, but something had to be done, let alone the whole moral option of offering it. It was getting out of control in terms of cost. So I'm glad something passed. Honestly, I still don't know how it's going to affect me as an employer."
    Regards,
    chiropractor

     

    reply to this | link to this | view in thread ]


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