The ACA & Small Business, The Myths... and Realities
REGIONAL – Among the myths and fears surrounding the coming of the Affordable Care Act, those involving small business are some of the most grandiose and pernicious. Suffice it to say, the facts are something else altogether.
On October 1, to comply with the ACA, a business with fewer than 50 full time positions (or their equivalent in employee hours worked) doesn't have to do anything other than to inform their employees of their options in the new health exchange marketplace.
Businesses of that size do NOT have to provide health insurance.
The law defines full time workers as those who have at least 30 hours a week employment. The law also counts up the hours of part timers with fewer than 30 hours toward an overall number of full-time equivalent workers. So, — quick back of the napkin calculation — does your business require more than 1,500 hours of employee time a week? If not, then no worries. Your employees can simply sign up at the health exchange for the plan of their choice and will receive subsidies to help make it affordable. Many low income part timers, such as restaurant wait staff (and reporters), may simply qualify for Medicaid.
Small business owners at this level have enough headaches as it is, why should they be burdened with providing health insurance, too? Of course, the 25 percent of small business owners who have no personal health insurance themselves will have to get some or pay the penalty.
If you have a small business of this scale, and you want to provide health insurance to your employees, then you will be able to do so, and most likely achieve significant savings over any health plan you may be offering today, both in terms of cost and quality of coverage.
Officially, New York State is on track to open health insurance exchanges for small business. Unofficially, who knows yet? In 2014, those with up to 50 full time employee positions will be able to shop at the Small Business Health Options Program (SHOP) for health plans to cover their employees. This offers small businesses the same advantage that the exchanges offer individuals — the power of numbers to increase purchasing power and lower costs while retaining high quality coverage. In today's market, small businesses are likely to pay as much as 18 percent more for insurance per employee than large corporate insurance purchasers.
So, what must small business employers do?
Inform employees of the health insurance marketplace, tell them that they may be eligible for premium tax credits if they buy health insurance through the marketplace, and also that they may lose the employer contribution to health benefits (if any) offered by the employer. If employers do provide health benefits they must provide employees with a "Summary of Benefits and Coverage" to explain what their plan covers and what it costs.
More than 50 employees? In 2015, small businesses with more than 50 full time employee positions will face penalties if they don't provide insurance, or they don't pay at least 60 percent of an employee's contributions, or if that insurance doesn't meet minimum standards, as in a "Bronze" tier plan from the exchange, or, finally, if the cost exceeds 9.5 percent of an employee family's income.
This part of the ACA, where things do get complicated, was put back a year because, it was said, of the scale of the task involved and the lack of readiness in both the business community and the bureaucracy.
Scheduled for 2017 — states will be allowed to let businesses with more than 100 employees purchase insurance at the SHOP exchanges.
And, if an employer prefers, he or she can turn to an insurance agent to find a suitable plan and get the business signed up. New York State insurance agents have been attending seminars to gain certification. They must also pass an exam, and re-certify every two years. They are also taking refresher courses in Medicaid and SNAP (food stamps) benefits.
Due to a variety of reasons, at the time of writing, it appears unlikely there will be any agents certified to sell individual policies under the ACA in New York by October 1, but there will be agents to sell SHOP policies for small business.
Important to remember: 96 percent of all companies in the US are small businesses with less than 50 employees. They face no penalties for not providing health insurance. Their employees can simply go to the health insurance exchanges.
Turning to myths and realities of the ACA in a more general way...
1. Euthanasia and "death panels"– This is a myth, but a popular one. The notion that faceless bureaucrats would decide to euthanize grandma in her hospital bed grabbed the American imagination like Sasquatch and won't let go. As time goes by, this belief will recede, since the "death panels" won't actually exist. What the ACA will do is cover the cost of voluntary, private consultations concerning end of life issues.
2. Veterans' access to health care will not be affected. They will continue to receive the health care they already get.
3. People with employer-provided health insurance will not be forced to change doctors or give up their health insurance.
4. The ACA will not hand control over your bank accounts to the government. This myth is a popular one too, but it remains a myth. Payment for health insurance obtained through the health exchanges will be by check, money order, or direct electronic payment, just like a utility bill.
5. Medicare will not be cut to pay for the ACA. In fact the ACA reforms will improve the long term outlook for Medicare and will close the "doughnut hole" on prescription drug costs for Medicare beneficiaries.
Interesting facts you may not know...
Under the ACA rules, insurance companies must spend at least 80 percent of premiums on actual medical care, instead of administrative costs. Failure to do this requires the companies to provide rebates to policyholders, whether they are companies or individuals. Employers have discretion thereafter to allocate the rebate.
New York State could save $19 billion over the next decade because of the ACA and the health benefit exchange. The Urban Institute, a non-partisan research group, estimates state savings once the ACA is fully implemented at $2.3 billion a year.
Research by New York State suggests that exchange health plans will be almost 70 percent cheaper than those currently offered. The government will offer about $2.4 billion in tax credits to offset costs.
And, of course, the ads featuring rubber gloves and Uncle Sam are just intended to dissuade young people from signing up for health insurance on the exchanges. Does the ACA mean that "the government" is "playing doctor"? No. The government's role is simply to provide a better way for the self-employed, the uninsured, and small business people to obtain affordable health insurance.
It's really that simple.