Affordable Care Act Exchanges Open

Majority Of Small Businesses Not Significantly Impacted

Affordable Care ActMore than three years after the Affordable Care Act (ACA) was signed into law, today begins the official rollout of online insurance exchanges. All companies, regardless of size, are required to notify their employees that the exchanges exist, but the majority of small businesses will not be significantly impacted. In fact, smaller firms with 50 or fewer full-time employees are not required to offer insurance to staff, while all other companies now have until 2015 to provide coverage before facing penalties. Still, experts say, confusion persists among business owners.

"People are trying to understand the law, but most don't," said Victoria Braden, president of Braden Benefits Strategies, a consultancy that specializes in ACA compliance. "What's not well-defined is how terms like small business and large business are being delivered, so there's a lot of frustration."

The federal government has set up a website at www.healthcare.gov as well as a call center to respond to concerns. Many questions are being asked about the creation of the Small Business Health Options Program (SHOP), which gives small companies (50 employees or fewer) a place to shop for group health plans. Starting today, businesses can get basic plan information at https://www.healthcare.gov/marketplace/shop/, although a recently-announced delay in the program means side-by-side comparisons and Web enrollment won't be functional until November. Federal officials continue to stress that small companies are not mandated to use SHOP, but it's a resource available to firms.

For business owners that have just more than 50 employees, though, decisions are tougher. If these companies cut back on staff, they can avoid being required to offer employees insurance. But, according to Braden, at least some firms aren't letting the ACA employer mandate dictate their strategy. "I have a client with 53 employees, but instead of cutting back, he wants to stick with his business plan," Braden said. "It's going to cost him a lot of money, but he's planning for growth."

While some companies will certainly face higher costs, an ACA provision will grant tax credits to small businesses that provide employees with coverage. As an example, small businesses with fewer than 25 full-time employees with average annual wages below $50,000 can get tax credits to help offset the cost of premiums. However, while the ACA does provide some level of premium relief, profitable companies will face tax increases. In fact, firms that generate more than $250,000 in annual profits must pay a 0.9% increase on the current Medicare part A tax.

Braden says there's no doubt business owners are worried about rising insurance costs, so she recommends companies renew their current coverage before the end of 2013. Since many actual ACA regulations don't take effect until January 1, 2014, companies can lock in costs before anticipated price jumps. "You'd have 11 months to see how things with the law shake out," Braden said.