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Health Care Reform: Myths and Realities

November 27th, 2012 ::

By Maria Valdez Haubrich

While the news is full of big companies crying foul about health care reform now that President Obama has been reelected, how are small businesses reacting? The primary sentiment among small business owners is mass confusion, reports eHealth’s Fall 2012 Small Employer Benefits Survey.

The poll of small businesses and self-employed people found that 77 percent of small employers were holding off on their long-term expectations of how health care reform might impact their business. The biggest concern (held by 61 percent of small employers) was the cost to their businesses. However, 25 percent were struggling simply to understand what health care reform would mean to their companies.

eHealth took a look at the realities of health care reform and asked small business owners their beliefs and found a big disconnect. Here are some of the myths and realities.

Health Care Reality: Under the ACA, employers with fewer than 50 full-time employees are not required to buy health insurance for those employees.

Health Care Misunderstanding: Only two employers in the survey had more than 50 employees. However, one-third (34 percent) incorrectly thought they would be required to provide insurance for employees in 2014, and about the same number (35 percent) weren’t sure if they would be required to do so. Only 31 percent knew they will not be required to provide health insurance.

Health Care Reality: If you have fewer than 50 employees, you don’t face a tax penalty of any kind if you don’t provide health insurance for your employees. Employers with 51 to 199 full-time employees must pay a $2,000 tax penalty for each employee who buys health insurance through an insurance exchange. But they don’t have to pay taxes for the first 20 employees who do so.

Health Care Misunderstanding: Thirty-four percent (34 percent) of the employers in the survey thought they would be taxed if they didn’t offer health insurance in 2014, and 35 percent weren’t sure. Only 31 percent correctly said they wouldn’t be required to pay a tax for not offering insurance.

Health Care Reality: The Affordable Care Act calls for health insurance exchanges to be created in each state in 2014. Exchanges will allow employees to buy subsidized health insurance on the individual market even if they have a pre-existing medical condition. If you feel guilty about not offering insurance, this could ease your mind by making it easier for employees to get insurance on their own.

Health Care Misunderstanding: The vast majority of small business owners (78 percent) admit they aren’t familiar with health insurance exchanges or how the exchanges might affect their businesses.

Despite their uncertainties, the majority (68 percent) of respondents did not plan to stop offering health insurance to their employees. About one-third said they would consider dropping insurance, but just 3 percent said they definitely plan to do so.

Image by Flickr user twbuckner (Creative Commons)


The views expressed here are the author's alone and not those of Network Solutions or its partners.

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Posted in Business Law, Compliance, Small Business, small business, Workforce | 1 Comment »

  • http://www.facebook.com/CraftsCrazy Beth Parker

    You say that the penalty is only imposed for the number of employees who buy insurance through the exchange. It was my understanding that if even one employee purchased insurance through the exchange, the company would be hit with a penalty for all employees except the first 20. One thing is for sure–it’s a long, confusing law.