What ‘Obamacare’ Means for Your Small Business

Posted on Thu, Sep 06, 2012

Since it was enacted into law in 2010, the Patient Protection and Affordable Care Act — or “Obamacare” — has become one of the most lauded and lamented measures implemented by the U.S. government in the past half century.

Designed to reform the American health-care system, the highly controversial act was ultimately deemed constitutional in June by the U.S. Supreme Court. Beyond mandating that individuals who are not covered by an employer or government health-care plan must purchase insurance, Obamacare will certainly impact small businesses in other significant ways when its provisions go into full effect in 2014.

Cost vs. Care

The rising cost of health care has played a major role in the steady reduction of businesses that offer health insurance over the past decade. According to a recent report from The Kaiser Family Foundation, in 2001, 58 percent of companies with between three and nine employees offered some form of health coverage to full-time employees. By 2011, only 48 percent of those companies still offered this benefit. During the same period, the number of companies with 10 to 24 employees offering health benefits also declined, from 77 percent in 2001 to 71 percent in 2011.

One of the explicit goals of Obamacare is to increase the number of small-business employees covered by health insurance. The act stipulates that employers must pay for at least 60 percent of any independent health-care coverage obtained by their employees, which makes coverage more “affordable” for both the employer and the employed.

Meanwhile, companies with 50 or more full-time employees are required to offer health insurance benefits. Employers of this size that fail to do so will be assessed a penalty of between $2,000 and $3,000 per employee (not counting the first 30 employees).

Pros and Cons

Despite the Supreme Court’s ruling, the health-care debate continues. Proponents of the enacted reforms contend that changing the nation’s health-care system will eventually lower insurance costs and make coverage more affordable for millions of Americans.

“Without the mandate, premiums would be higher — and it could lead to more people not getting insurance,” Elise Gould, director of health policy research for the Economic Policy Institute, told Entrepreneur.

Detractors assert that health-care reforms may penalize employers without doing much to actually reduce the cost of health care in America. “This law will have a dramatic, negative effect on every employer and employee in the United States and further constrain job creation and economic growth,” says Matthew Shay, president and CEO of the National Retail Federation.

Obamacare and You

In 2011, the global management firm McKinsey & Company issued a report indicating that 85 percent of employees would keep their current jobs even without employer-subsidized insurance. But, as a result, nearly two-thirds of these workers would expect a compensation spike.

To learn more about The Patient Protection and Affordable Care Act and how it may impact your small business, click here.

Obamacare Teaser

by: Michael Essany

Tags: health care, health insurance, obamacare, President Barack Obama, HR Allen Consulting Services, HR Informant