What Will Obamacare Do To Small Businesses?

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The employer mandate to offer health care coverage to all full-time employees goes into effect in 2015. This being said, many employers are trying to add up the numbers and figure out their best course of action. Unfortunately, many businesses may have to make sacrifices to make ends meet in the face of these demands.

What Does it Demand?

The Affordable Care Act demands that all businesses with 50 or more employees provide health care to their full-time employees (those that work 30+ hours a week). Any business that fails to do so will have to pay a $2,000 fine per employee that is not covered.

How Much Will it Cost?

Obviously the cost to a business depends on the number of employees the business has, as well as the type of coverage they decide to offer. Many have speculated that it will be less expensive for employers to pay the fines than to provide health care coverage. Many small business owners say that they would pay half of the cost, or less, of health coverage in fines a year if they simply dropped insurance altogether.

What Does it All Mean?

One important question about the Affordable Care Act is whether or not employees will be able to get the coverage they want and need under this system. While it sounds great for all full-time workers to receive health benefits through their job, small businesses often won’t have the money to provide the best coverage out there. Therefore, many employees may find that their better option is to decline their employer’s coverage, and find their own individual plan that better fits their needs, and/or the needs of their family.

Some employers need to figure out if the fines or the insurance costs are the best option for them. The issue there is that, if the employer is unable to afford coverage and the fines are less expensive, their employees are actually suffering in the long run. Without the enforcement of fines on businesses that cannot pay exorbitant health coverage costs, these businesses would be able to raise salaries, providing employees with more money to seek their own health coverage. Many employers have stated that they plan to do just this, and take some or all of the money they save by not offering coverage to raise wages, but there would be more money to do so without the penalties.

Smaller businesses have another option, which creates a risk of damaging the economy even further. A business who employs not many more than 50 employees can escape having to offer health care coverage by either cutting their employees’ hours to below 30 a week, or by laying off enough employees that they have a staff of 49 or less. If too many businesses address the issue in this manner, the country runs the risk of rising unemployment, and workers run the risk of not having enough hours to support themselves.

The fact of the matter here is that small business is going to take a hit. Businesses that can’t afford to offer coverage are going to be fined, making them even less able to afford to help their employees or to keep their businesses afloat. To prevent this, they may have to cut hours or employees, further damaging our already sinking economy. The real question is, as great as universal healthcare sounds in theory, is whether or not there is a true gain once the costs have all been assessed?

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