Let’s start where one expert stopped.
“We don’t know how a lot of this is going to work,” says Randy Kammer, vice president of regulatory affairs and public policy, Blue Cross Blue Shield of Florida.
Like with any new law, it’s going to take time to understand the exact mandates and lasting effects of Congress passing the $940 billion health care reform.
The good news is most of the changes that will affect you won’t take place until 2014. The bad news, maybe, is that you have to start planning now. Once you understand some of the specific regulations, you’ll realize this is bigger than just buying health insurance. It could affect your finances, the number of employees you choose to employee and, ultimately, your strategy for growth.
“The thing that I would tell small business owners is they need to not run away from this, especially when there are things that are very confusing, very complex,” says Eileen Rodriguez, regional director, Small Business Development Center at the University of South Florida. “You want to be able to plan ahead and see whatever is coming at you, whether it’s good or bad, so you have time to plan and adapt properly.”
What you need to know
First off, if you have fewer than 50 employees, you’re exempt from the mandate that requires companies to provide insurance to employees by 2014 or be faced with a fine.
If you have fewer than 25 employees and average annual wages of less than $50,000, you’ll be able to see savings this year. A small business tax credit worth 35 percent of your contribution toward your employee’s insurance premium is expected to be given for 2010. The second phase of the tax credit begins in 2014. Those who purchase their employee health insurance through a state exchange will receive a tax credit of up to 50 percent.
“(Businesses) really need to focus on how do they get this temporary tax credit,” Kammer says. “How is it going to be issued? When can they take advantage of it? Because it’s my understanding that they can take advantage of it this year.”
Companies with fewer than 100 employees will be able to take advantage of state-based Small Business Health Options Program (SHOP) Exchanges in order to purchase coverage. The SHOP Exchanges will allow companies to enter into a pool to buy insurance.
“Small businesses are going to be able to pull together to purchase coverage under an umbrella,” Rodriguez says. “This should potentially allow these small firms to improve their purchasing power.”
The exchanges will be grouped by geographic region and are expected to be organized by 2014.
Companies with more than 200 employees are required to automatically enroll employees in their health insurance plans, but employees can opt out of the coverage.
[Page 2: What you need to prepare for]
What you need to prepare for
No matter your company size, no matter your internal resources, this is not something you should attempt to understand on your own. Turn to your trade associations, your broker, a business development group, someone you trust who will be knowledgeable about the topic.
One reason is the health insurance industry expects premiums to increase in the coming years as cost shifting occurs prior to taxes really setting in.
“I started to look at the taxes that are going to come into place in 2013, and most of that is on the business owners themselves,” says Thomas Mangan, CEO of the Philadelphia brokerage and consulting firm Corporate Synergies Group Inc. “Heading into that, you’re going to have these high increases that, most likely, most small and medium businesses will (see) in the 12 to 14 percent range.”
For most companies, as you know, health insurance is one of the largest line items in the budget. Mangan suggests sitting down with your broker to discuss whether or not you can expect a significant increase in your premiums and what that ultimately means for your company. Premiums should go down once most of the law’s mandates are in place.
Health plans also will change because of certain regulations insurance companies face, such as eliminating discrimination against pre-existing conditions and no cost sharing for preventative services.
Much larger than your plan, this law could decide how many people businesses choose to employ.
“They’re going to keep a much closer eye on what their limits are once all of this falls out as far as what advantages might be out there for small businesses that have X amount of employees,” Rodriguez says.
Because there is so much uncertainty, because there are so many changes expected to take place that can affect your business, this is not something you can sit around and wait, watch how it plays out and then react.
“This is an opportunity for a smart business to become very proactive and have an advantage over those companies that do nothing,” Mangan says. “Those who don’t take action are going to end up getting hit much worse and it will reflect it in their price.”