With the final Supreme Court decision on Obamacare made, small businesses face a plethora of options, most of which are not attractive in either the short or long run.
Every analysis done in the past 12 months, including those completed by government agencies, indicates before the decade is out, small businesses will still be paying considerably higher rates for healthcare insurance.
Whether they choose to adopt a policy of paying into a government fund for not offering healthcare insurance, or provide funding for employees to purchase insurance through exchanges, the end for small businesses will be more expenses.
No one in or out of government argues healthcare insurance rates will decline as the act requires insurance providers to accept all applicants and to provide additional benefits regardless of the company’s workforce makeup.
There are also limits on growth imposed by the graduated implementation of requirements as the workforce numbers increase.
For 2013, the smart decision, some experts suggest, is to reduce or eliminate employee healthcare insurance by smaller companies.
The penalties over the next four years are far less than the cost of offering such policies.
Given the current control of the House by republicans, these fees are not expected to increase although there are provisions in the law that permits the Administration to raise them without Senate or House consent.
Rohit Arora, CEO and co-founder of Biz2Credit and one of the county's leading experts on small biz finance believes will the affirmation of Obamacare will impact different types of small biz owners in varying ways:
- For sole proprietors: The individual mandate of the Obama Healthcare law that requires Americans to have health coverage applies to sole proprietors. There are financial penalties designed to make people comply with the provision. (The penalty for not having insurance is $695 or 2.5% of income – whichever sum is larger.)
- For small businesses that offer health insurance to employees: If your company has fewer than 10 full-time employees (and average salaries lower than $25,000), your company is eligible for a credit of 35% of your contribution toward each employee's insurance premium. (As the number of employees goes up and as their salaries rise, the tax credit goes down.) If your company has more than 25 full-time employees or averages $50,000 in salaries, the credit is eliminated.
Arora also believes this will have a negative impact on hiring by smaller enterprises.
“The Supreme Court’s ruling removes a major source of uncertainty surrounding this important national issue. With all of the law’s provisions still in place, employers will need to redouble their compliance efforts, especially regarding such immediate requirements as providing summaries of benefits and coverage to their employees,” said Julio A. Portalatin, President and CEO of Mercer.
The individual mandate, which has sparked fierce political and legal debate, requires most Americans to have adequate health coverage starting in 2014 or pay a penalty. Also in 2014, employers that fail to offer full-time employees and their dependents affordable coverage with a minimum value likewise will face penalties.