What Can Small Businesses Anticipate With Health Care Reform On The Way? Well, That Depends...

from the Ch-Ch-Ch-Changes dept

After a long Congressional battle, the health care reform bill passed the House last weekend and has left many small business owners wondering what will happen to them. Not all of the details have been brought to light, in part because of the reconciliation process that's gone on this week. This is somewhat frustrating, since there's basic approval of a bill without all of the important details -- but there are a few that are immediately clear. First off, small businesses with less than 50 employees will be exempt from requirements to offer health insurance. Companies that are a bit larger and getting close to 50 employees should make sure they can document exactly how they count employees and full-time equivalents (FTE). The number of employees will determine the amount of tax credits (or penalties) for offering (or not offering) health insurance.

So where will all this insurance come from? By 2014, the federal gov't requires every state to set up a Small Business Health Options Program (or SHOP Exchange), so that small businesses can "pool together" to buy insurance plans. If a state fails to set up a SHOP Exchange in time, the federal gov't will provide one of its own. Still, there's four years to see what a SHOP Exchange will actually look like -- and many predict that these exchanges will start sprouting up before the end of this year.

In the short term, there are some tax credits that small businesses may have available this year, which they should certainly be looking to understand -- rather than waiting around. But, on the whole, small businesses may not be required to do anything differently -- and might optimistically benefit from the insurance plan competition generated by the SHOP Exchanges. For firms that have around 50 employees, it's a smart time to start crunching the numbers and to try to forecast what the financial pros and cons are for providing coverage and obtaining tax credits vs. paying fines and letting employees handle their own insurance. Besides the financial impact, business owners should start planning now for consequences such as a reduction in "job lock" -- instead of assuming they can deal with managing their employees' benefits in less than proactive way. With the economy supposedly picking up, employers may see less loyalty from employees and a different view of health care benefits.

In the long run... well, there are still some factors that could change the final outcome of this reform. Thanks to the reconciliation process, some of the language of the bill has been shifting -- and who knows what happens after the next election cycle (and, of course, the one after that). While some had said getting health care reform finalized (one way or the other) would at least be good for certainty, there's very little certainty at all at this point for small businesses, and this game of political football looks like it will continue to be played and many of the provisions don't come into effect for a few years. At best, it seems like small businesses need to at least pay attention, but not do anything too drastic just yet.

In the meantime, while we wait for the politicians to argue it out, it would be great to hear from any small business owners here, concerning their own experiences in dealing with health care for employees, or suggestions for how the system could or should be improved.

Filed Under: health care, health reform, small business