Obama Health Care

The Affordable Care Act (ACA) or Obama health care as it’s commonly become known as, is a law that will greatly effect small businesses come 2014, when small companies must choose to keep the coverage they currently have on employees, or use the health insurance exchanges.  For most small businesses, the subject of Obama health care is one that is confusing and complicated, to say the least.  Just over a year until many of these changes will take place, many small business owners still find the changes that will be implemented over time about as clear as mud.

Here are a few answers to questions about Obama health care and how exchanges will work.

Through exchanges, will health insurance rates go up?  Yes.  Over the first few years, premiums will actually increase because the ACA does nothing to reduce medical costs on which the premiums are based immediately.  Over time, rates should go down substantially.

If you are a business owner with fewer than 25 employees, should you cancel your current employee coverage prior to 2014?  It all depends on the average income of your employees and the market.  For instance, if you are a retail business owner with employees who are mostly low-income and will qualify for premium subsidies in the exchange, it may be more beneficial to cancel your employee healthcare plan before 2014.  However, if your employees earn a moderate income and are in a field where it is more difficult for you to replace or train staff, it may be beneficial to keep your present plan.  This will help entice your employees to stay.

Obama health care isn’t all bad for small business, and in fact some provisions are good.  For instance, businesses with fewer than 25 full-time employees who pay at least 50% of the total premiums in order to qualify for a tax credit will not see that go away.  As it currently stands, those employers currently get a tax credit of up to 35%, which will increase to 50% in 2014.

State-based exchanges will eventually mean that smaller companies can compete with the bigger companies, as they will have “pooled” purchasing power, meaning more affordable coverage.

Ultimately, there are advantages and disadvantages for small businesses when it comes to Obama health care.  Many business owners feel that it will result in a bigger unemployment rate, as the biggest expense of all for the small business owner is the labor force.

Even though the individual mandate was upheld by the Supreme Court in June of this year, many believe that the political debate over Obama health care is far from over.  The opinion of many is that throughout the process to reform health care, the small businesses have been completely overlooked.   It’s apparent that many people are still in the dark when it comes to the future of health care and affordable health insurance.  Unfortunately, it seems that small business owners may be the ones affected most by the changes in a negative way. No matter what happens, no doubt it will go down in history as one of the most debated political issues for generations.

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