Whether you’re a fan of Obamacare or not, the Supreme Court has upheld it as constitutional, meaning it will become a reality before long. The Patient Protection and Affordable Care Act has had it’s share of supporters and detractors, but outside of the politics surrounding this hotly-debated law, the fact remains that it will significantly change the landscape of healthcare in the United States. Most of the changes will take effect in 2014, so small business owners who provide healthcare to their employees, or freelancers who pay for their own care, would be wise to study up on the particulars well in advance of their application, and avoid being late to adjust to the new realities. Here is a look at the potential impact of the new healthcare law on small businesses.
The first step is understanding what the key provisions of the Affordable Care Act are, and how they will affect your small business in the real world. First off is the individual mandate provision, which requires all individuals to have health insurance. If not, they would pay a fine. Credits will be provided for individuals who prove they have moderate or low incomes and need some support. On the business side, any company with fewer than twenty-five employees will receive tax credits if they provide their staff with health insurance. Companies that have more than fifty employees on their roster and do not supply health insurance will face penalties. On the state level, new insurance exchanges will be created, basically giving individuals and businesses access to local health plans that are approved under the new program. Each state will have options for small businesses, and if a state cannot provide it, one will be available on the federal level.
So how will all of this affect the small business? It may help to consider some examples, and see how their present situation must be amended under the future law. If you run a small business with under fifty full-time employees, but do not offer health insurance, business can continue as usual. After 2014, your employees will be able to use the state’s Health Benefit Exchange to find a plan that fits their needs.
If you’re self-employed, a freelancer or an individual practitioner, you will certainly benefit from the changes. Especially if you have some sort of pre-existing condition that has kept you uninsured in the past, or are looking for insurance that covers maternity issues and haven’t been able to find anything. Once 2014 rolls around, pre-existing conditions will no longer be an acceptable reason not to offer healthcare, and all health insurance will be required to cover maternity benefits. Of course, if you’re in this situation and have simply gone without the added expense of health insurance, those days are numbered. You’ll have to find insurance by 2014, or face a fine.
What about the small business that pays a portion of their employees’ healthcare costs? The company will receive an instant tax credit on whatever amount of money it pays towards employees’ health benefits, up to 35%. After 2014, that tax credit will increase to 50% of all healthcare costs paid. And business owners can claim the rest of the healthcare payments as a business expense. The only losers may be the small businesses with more than fifty full-time employees that do not provide healthcare. They’ll face a fine of $2,000 per year for each uncovered employee, after the first thirty employees.
It may sound so complicated that you might be tempted to find some mha degree programs’ top students to explain it all to you. But as long as the health insurance exchanges live up to their promise, the changes should bring about far more benefits than detriments.
Evan Fischer is a freelance writer and part-time student at California Lutheran University in Thousand Oaks, California.