Obamacare Effects: How the New Law Might Affect Your Business

If you’re a small business owner, you’re probably curious about the “Obamacare effects”.

That is, the effects that the provisions of the Patient Protection and Affordable Care Act (PPACA) will have on your business.

As with any major (or minor) piece of legislation that goes through the motions, deciphering it and figuring out how it affects you and your personal interests can be a bit of a daunting task.

The difference here is that the PPACA has far-reaching ramifications that will affect everyone; individuals, small business, larger corporations, and the like.

So, just what are the Obamacare effects that you should be aware of and what, as a small entrepreneur, can you do in order to prepare?

Overview of the PPACA

When it comes down to it, the PPACA’s goal is to make health care coverage widely available for all Americans.

According to the most recent numbers, there are nearly 50 million Americans who are without insurance at the time of this writing.

While the reasons for a person being without insurance are varied, the fact of the matter is that the passage of the law has caused controversy that has incited discussion on the issue from people who hold both favorable and unfavorable views of the matter.

Much of the debate focuses on issues like the individual mandate, which requires that every American have some sort of health care coverage by 2014, as well as what this means for small businesses that may not currently provide coverage for employees.

For our purposes, we’ll be focusing on the latter, as this is something that you will need to consider as part of your business plan while you move your company forward.

So, let’s get started.

Insurance and the Small Business

Your employees are probably the single most important aspect of your company and, as the company’s owner, hopefully you have discovered ways of showing them that.

In addition to your normal monetary incentives, work-life balance, and friendly policies you might offer, health insurance is one that gives an employee peace of mind in case of medical emergency

While offering health care to people working for your company may have seemed like a complex matter before, the provisions brought on by the new legislation may make it appear that things are even more complicated than before.

But that isn’t really the case.

Let’s take a look at many of the primary ways in which the Obamacare effects will influence small businesses like yours and you will have a much clearer understanding of what these laws mean for you.

• For the Business Owner Who Has Fewer than 25 employees – As it stands right now, you may qualify for tax credits that are up to 35 percent of the premiums that your employees pay for their coverage.

This number could increase, starting in 2014, if you arrange for insurance through Small Business Health Option Programs, or SHOP exchanges (more on those in a moment).

• For the Business Owner Who Has 25-49 Employees – In your case, the Obamacare effects should not be drastic.

While you won’t be expected to offer health insurance to your employees, the issue of potentially higher premiums is something that you will have to contend with as a condition of running your business if you decide to provide coverage.

• For the Business Owner Who Has More Than 50 Employees – You will see the largest number of changes in how insurance coverage is addressed.

You can either sponsor a health plan for 100% of your employees starting in 2014, even if they receive government subsidized insurance, or pay what’s called a shared responsibility requirement for each worker under your employ.

There is one thing that each of these types of business would have in common due to Obamacare effects, and those are the aforementioned SHOP exchanges.

These exchanges would allow your small business to enter a pool with other companies where you will then use collective buying power to negotiate insurance coverage for your employees.

This provision doesn’t take effect until 2014 and will, on a federal level, apply to companies with 100 or fewer employees. However, states will have the right to limit it to firms with a maximum of 50 employees up through the year 2016.

Deciding Where to Go From Here

These are the basics of the Obamacare effects on small businesses like yours so, whether you’re up and running now, or you plan to be soon, it pays to familiarize yourself with the act so that you can make sure you have a strong understanding of what it entails and how you will be affected by it.

Going forward, health insurance may be something that you will have to factor into your business planning, so it makes sense to conduct a full and thorough financial analysis in order to gauge the viability of health insurance within your organization.

As you company grows, you may eventually reach a point where you will be legally obligated by Obamacare effects to offer your employees coverage (in lieu of a fine). With that in mind, you may want to consider the services of a financial advisor to help you make the right decision regarding what you can offer while still remaining in a position to thrive as a business.

December 2, 2011 at 4:00 pm | Business, Business Strategy, Government
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