I’m not taking sides here, but after talking to a number of employers, I believe that that Affordable Care Act creates an opportunity for companies to examine some of the reasons they may have been reluctant to provide insurance in the past – the difficulty of knowing how to buy coverage; the difficulty of knowing what coverage would really be helpful and useful to workers; and the difficulty of knowing whether that coverage could be purchased at an affordable price.
And, if an employer ultimately does decide to provide insurance, the Affordable just-born health exchanges will have eliminated a great amount of the complexity and legwork for the company.
One employer I know is currently weighing his options thoughtfully.
He runs a retail pet food store and has 300 employees. He’s committed to his employees, and he wants to provide them with insurance.
But, as he began to sift through the data, he started to realize that the health exchanges in the state of Washington offer his employees automatic Medicaid, which is a great deal. So, maybe, he won’t provide insurance after all. Maybe he’ll re-deploy those dollars into an employee wellness program – or build a company gym.
I’ve been talking about employers here. Let’s talk about employees for a moment.
Like employers, they can use this time to plug into the health exchanges and shop around a bit. That way, they can get a much better handle on costs and coverage, too.
I meant it when I said I wasn’t going to take sides, but that doesn’t mean I can’t present both sides of the Affordable Care Act – simply in the name of informing and educating.
The potential upsides for the small-business owner start with the fact that buying good insurance gets easier, more regulated and more transparent under the Affordable Care Act.
There will still be potential tax credits for qualified small businesses.
Employees will be able to design their own appropriate coverage if the small-business owner decides not to provide insurance.
And, in the long run, small businesses will be able to ditch the administrative burden and HR nightmare of being the middle-man for employees when it comes to health care coverage (“Why did I have to pay a co-pay when I broke my leg?” Or, “Why is my son’s treatment not covered by our plan?”).
The criticisms of the Affordable Care Act stem from claims that the Affordable Care Act will cripple small companies, because the employer mandate will hurt profits and curtail hiring.
The other side of the coin is that the Affordable Care Act can help get small businesses started, because entrepreneurs can now find affordable health insurance. One resent study estimates that the Affordable Care Act could enable 1.5 million people to become self-employed. So, there is an economic growth and value creation argument to be made on behalf of the Affordable Care Act.
The Affordable Care Act will also help small businesses with health-care costs, which, as I’ve mentioned, have long been a source of anxiety. In the past, for example, if just one person at a small business got really sick, premiums at the company could explode through the roof. I know, because it’s happened at more than one company I’ve managed.
Okay, I promised to be even-handed, so now let’s look at some of the downsides of the Affordable Care Act for small businesses in our country.
First off, I would say that the Pay or Play decision is fairly momentous, and it needs to carefully addressed. If you get it wrong, you’ve made a mistake of consequence. It’s not that you can’t fix it, but small-business owners are absolutely on the spot here.
Second, I would say that if a small-business owner provides coverage, and his or her competitors don't provide coverage, the owner who provides coverage will have to pass along higher prices to his or her customers.
Third, I would say that if a small-business owner doesn’t provide coverage, he or she could lose some of the company’s best workers to rival companies offering insurance.
Fourth, employees are going to be expecting health care from a small business – even if the company doesn’t have to provide it because it has less than 50 employees. Small-business owners will have to educate employees about their decision to either provide or not provide health insurance. There will also have to be discussions about how employees can gain coverage through the health care options. These conversations will be an initial HR burden.
Fifth, small-business owners can expect increased reporting obligations to the IRS on their employees’ health care coverage costs.
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