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# Friday, September 20, 2013
3 Ways Obamacare Is Set To Impact Business

The White House recently announced that it would delay for a year the employer mandate for the implementation of the Affordable Care Act. These delays were due to concerns from employers over the complexities of the requirements and their implementation. Another reason given for the delay is that the IRS is unsure how to verify that employers are offering affordable healthcare or not.

In 2015 companies with 50 or more employees will be required to provide health insurance. Those that won’t supply health insurance will be taxed $2,000 per employee excepting the first 30 employees. Below we will examine what impact these changes are likely to have on both small and large businesses.

The Effect Of Obamacare On Hiring

One of the criticisms of the Affordable Care Act is that it gives businesses a disincentive to hire. Businesses with just over 50 employees might be inclined to fire a few employees to bring themselves under the 50-employee threshold, while those approaching 50 employees might be reluctant to hire.

Whether employers would actually take these steps to avoid penalties is at the moment unknown. Regardless, few employers will actually be affected. According to census figures, only 9% of employers have between 20 and 99 employees. And 87-92% of employers between this band already offer healthcare to their employees. Very few businesses will need to go from providing no healthcare benefits to providing full benefits for their employees.

Another concern is that businesses are switching to hiring more part-time employees. Full-time employees are classified as anyone working 30 hours or more. The penalties for not complying with the Affordable Care Act only apply to these full-time employees. Walmart made headlines earlier this year when a Reuters survey showed it was hiring only temporary employees at many of its locations. At the moment, the evidence that companies are switching to part-timers to avoid Obamacare penalties is only anecdotal.

Companies Choosing To Self-Insure

Another potential impact of Obamacare is an increase in the number of companies that choose to self-insure. Rather than paying premiums to an insurer, companies can pay directly for the healthcare costs that their employees incur. Under the new legislation, self-insurance health plans that pay the full cost of employees’ insurance will not be required to perform the full reporting requirements.

How Obamacare Might Impact Small Business

Obamacare offers tax benefits and tax credits via the SHOP exchange to small businesses with less than 25 employees that provide healthcare benefits. One of the primary concerns from small business is that administration costs will increase as a result of providing affordable healthcare. Only so many of these costs can be passed onto customers.

While this is a real concern, there may also be competitive advantages for small businesses that provide affordable healthcare. In the past, small businesses have been at something of a disadvantage compared to larger businesses for highly talented employees who are attracted by the perks of healthcare benefits. While higher costs are a real risk, there is also a chance to level the playing field for attracting top-quality staff.

Conclusion

Obamacare will undoubtedly have a significant impact on many businesses both large and small. Changes to hiring practices and the costs to business are real concerns. However, the new legislation also offers potential competitive benefits to small businesses. While there are plenty of reports that Obamacare is already impacting businesses, the true consequences will not be seen until 2015.

 

 
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