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Small Business Health Insurance Conundrum

Navigating the Affordable Care Act is no easy feat, especially if you own a small business. In trying to make “heads or tails” of the pros, cons, ins, outs, and, of course, the rules associated with the reforms to the health care system, you may feel like a dizzy-headed dog that’s been chasing its tail. Yes, the A.C.A. presents both benefits and challenges for small business owners and their employees–making it a full-blown health insurance conundrum.

“I’ve almost got it, but I feel nauseated.”

Here are some of the facts that you need to consider.

Your Options

If you currently offer health insurance to your employees, you have three possible options presented to you by the Affordable Care Act.

1. Forego a group health insurance plan, all together. This may include offering your employees a pay hike equivalent to what your company used to pay out in premiums. This way your employees can put that money towards an individual plan.

2. Eliminate your current group health plan and, instead, select a replacement through the Health Insurance Marketplace.

3. Remain with the status quo.

Small Business Health Insurance Conundrum

The Upside to Group Health Insurance Under the A.C.A.

The most obvious benefit associated with providing your employees with health insurance is the resulting increase in staff loyalty and employee retention. In “Controlling Costs: Health Care Options,” Business Consultant and sought-after speaker, Chris Vanderzyden, warns that dropping health benefits may cause employees to leave for an organization with better benefits, resulting in “an increase in cost to identify, hire, and train new talent.”

If you have never offered an employee health insurance plan, the Affordable Care Act has introduced measures aimed at making it easier and cheaper to secure one. For instance, women and employees with health problems can no longer be charged more for coverage. Plus, older employees will benefit from a lower cap placed on how much more they can be charged than their younger counterparts for insurance.

Group Health Insurance FAQ” lists a host of other benefits, including a possible reduction in payroll taxes and the fact that, as the business owner, you and your family will likely also enjoy coverage under the plan.

Furthermore, the future launching of SHOP, the Small Business Health Options Program, will enable small business owners to enjoy greater control over their level of coverage and the amount of their contribution towards employee insurance, as well as offering more tax credits.

The Downside to Group Health Insurance Under the A.C.A.

If you are the owner of a sole-proprietorship whose only full-time employee is your spouse, you are no longer eligible for a small business health insurance plan. According to the Wall Street Journal‘s “Small Firms Hit by Big Changes in Health Coverage,” over 78% of the nation’s small businesses have no employees and, therefore, must now seek coverage as individuals in order to avoid being fined.

Another problem associated with group health insurance since the Affordable Care Act’s introduction is that some employees may actually find cheaper coverage with increased benefits afforded to them through the Marketplace. As employees opt out of their group health plan, the group becomes smaller, which leads to an increase in premiums for the remaining parties.

And, the most staggering downside of providing an employee health insurance plan is the fact that, for many businesses, health insurance premiums have increased thanks to the A.C.A. Despite previous promises by Obamacare proponents stating that small business owners would enjoy decreased expenses associated with group health insurance, the evidence shows a very different reality. CNBC’s “Two-thirds of Small Businesses to See Premium Spikes Under Obamacare: Report” states that a report compiled by the Centers for Medicare and Medicaid purports that two-thirds of Americans who work for small businesses will see increased premiums in health insurance.

And, USA Today‘s “Obamacare Squeezes Small Business” adds that both a Chamber of Commerce and International Franchise Association survey revealed that “twenty-one percent of small businesses had reduced employee hours and nineteen percent had replaced full-time employees with part-time employees” to defray the costs associated with increased health insurance premiums.

“I’ll get back to that later.”

Now that you’ve got all the facts, you will be better able to examine your own situation and reach an informed decision. And, if not, you may want to take a much-need rest. You’ve earned it.

How has the Affordable Care Act impacted your small business health insurance plan?