With the approach of 2014 and full implementation of the Patient Protection and Affordable Care Act (PPACA), small businesses like physician practices need to understand the mandates and all the options available to them.
Health care reform will change the way small employers and their employees consume health insurance and other employee benefits. New options will be available, but at the heart of the new benefits paradigm are the challenges of determining which employer options are best – from a cost and tax perspective – and guiding employees to find the right protection at the best price.
The realities revealed
The online health insurance site ehealthinsurance.com interviewed more than 400 small businesses and learned most are not ready to successfully navigate or comply with the PPACA.
In fact, 70 percent either had incorrect perceptions, or were not sure, about the requirement to pay a tax or penalty for not providing health insurance. Also, 78 percent said they were not familiar with health insurance exchanges and how they could impact their businesses.
So what is a small business to do? First, let’s review a couple of PPACA facts.
Businesses with fewer than 50 full time equivalents (FTEs) are not mandated to provide benefits – and never have been. (When calculating that FTE number, include part time, seasonal employees, etc.) More importantly, these businesses will not be assessed a tax or penalty for not providing benefits. However, small businesses that do provide health insurance must comply with other mandates of the PPACA, such as providing essential health benefits, preventative care – and more.
The bigger question for small business is: What is the best path for the future when it comes to providing benefits? The answer depends on your business philosophy and goals for compensation, employer-provided benefits and total rewards, and how important providing benefits may be in your market. In other words, what are the demands of your workforce?
New resources under PPACA
Here are a few more facts to consider.
Subsidies available through the health insurance exchanges are substantive. And for the first time in benefit history, employees – even high-earning employees – will be able to receive premium subsidies and cost-sharing assistance to help them afford their health care costs, as illustrated in the chart shown here.
This chart assumes employees are not offered minimum value coverage from their employer at a reasonable cost. So, does it make sense to cancel your group health plan if you are one of the approximately 50 percent of small businesses that still provide health insurance? Should you let your employees get their insurance, and possible subsidies, on the public exchange or maintain the status quo?
This depends on several factors. We’ll explore those in Part II of our series in the next issue of ISMA Reports.
Partnering with experienced and trusted advisors who have the appropriate tools is the key to accomplishing your business goals in the new employee benefits world. Contact B. Michael Haffey, CLU, at the ISMA Insurance Agency for assistance with employee benefits.
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