The Effects on Different Size Businesses
Small business and midsize businesses are likely to experience the greatest impact from the implementation of the ACA. A recent LIMRA survey found that only 47 percent of small businesses, defined as those with less than 100 employees, currently offer health insurance to their workforce.
One of the reasons that so few of these businesses offer health benefits to their employees is the high cost of small group policies. To address this issue, the ACA provide a Small Business Tax Credit for business owners that have 25 or fewer employees whose average income is $50,000 or less annually. These employers, along with those who have a workforce of 49 or less, are eligible to purchase health insurance in the online health insurance marketplaces, which, due to competition among the health plan providers, are supposed to have lower premiums than small group plans available in the private market.
While most employers with more than 100 employees offer health benefits to their workforce, the need to ensure their existing plans meet the affordability criteria and have the minimum essential health benefits mandated by the ACA. Additionally, all employers will need to file reports with the government outlining the costs and benefits associated with the health insurance plans they offer. Furthermore, employers will also need to have documentation on file to show they have provided information about the state health insurance exchanges.
While employers will definitely experience some effect when the employer mandate goes into effect in 2015, careful strategic planning can go a long way in reducing compliance cost and minimizing the risks of incurring penalties.