The Conundrum Over Small Business and The Affordable Care Act

In just a few weeks the open enrollment period for the Patient Protection and Affordable Care Act, otherwise known as the Affordable Care Act (ACA) or Obamacare will come to an end. In the months and days leading up to this deadline much has been discussed regarding how small businesses would be affected by the ACA, Much of the discussion gets confusing depending on the size of the small business. Small businesses that have 50 or more employees are mandated to provide insurance for all full time workers while small businesses that have 25 or less employees are being offered tax credits based on the number of full time employees they have and their average annual salary.ACA Confusion

The determining factor of where a small business falls under the Affordable Care Act is where a lot of the confusion lay. As is shown above there is a differentiation on how businesses that have 50 or more employees deal with the ACA versus those that have 25 or less employees. What’s not mentioned is how small businesses that do not fall into either of those categories should deal with the ACA. One of the grossly misrepresented in this discussion are those businesses that are run by a single individual, the self-employed.

The premise of the ACA is to extend insurance coverage to all Americans and reduce the future cost curve of healthcare insurance. This is done by offering subsidies and tax credits to businesses. When it comes to being a self-employed business owner taking advantage of such benefits isn’t as easy as it would seem.

Determining if a self-employed individual can take advantage of the subsidies offered can be daunting. Since self-employed income can change month to month and year to year it is difficult to determine if the individual should even claim a subsidy. Although the Healthcare.Gov website provides instructions on how to estimate income it doesn’t go into detail about what to do with income fluctuations. If it is decided that a subsidy will be taken to lower the cost of the health care insurance it is the responsibility of the self-employed individual to ensure that the government be notified on any monthly income change. This unpredictability can result in an individual having to reimburse the government for any subsidies should their income be higher than what was used to determine the monthly cost of their health insurance. Bottom line it’s the onus of the self-employed individual to determine the subsidy amount to be applied and when to notify the government to any changes that may need to be made to it.

It is unfortunate that a group that plays a big factor in our economy, such as the self-employed, are hugely ignored in the ACA discussions. Our policymakers need to realize small business is not one size fits all entity. They need to stop referring to a business as small when discussing those businesses that contain upwards of 250+ employees. When lumping a self-employed business into this group those that own these types of businesses are done a disservice.

Are you self-employed? If so how has this whole ACA discussion affected you and your business? Let us know in the comment section below. 

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Barbara Goldberg

Business Operations Strategist at Back On Track Solutions
With over 15 years of corporate experience within Fortune 500 companies, Barbara Goldberg now brings world-class customer service to the small business community. An avid sports fan, Barbara likens her passion, focus and strategy to a crew chief guiding a race car driver to the finish line. Barbara will analyze, evaluate, distill and then solve the problems challenging business owners, allowing them to get back on track to servicing customers.

With over 15 years of corporate experience within Fortune 500 companies, Barbara Goldberg now brings world-class customer service to the small business community. An avid sports fan, Barbara likens her passion, focus and strategy to a crew chief guiding a race car driver to the finish line. Barbara will analyze, evaluate, distill and then solve the problems challenging business owners, allowing them to get back on track to servicing customers.

Posted in Insurance, Small Business Tagged with: , , , ,
  • I have owned my own businesses over the last 25 years and one of them was a health insurance agency. So I am very familiar with how the insurance side works. I was out of the business years before the ACA was passed. My wife is employed and we pay 50% of her and 100% or mine and the kids health insurance premiums. These group plans are much less expensive than what’s available on the government site. My premium has doubled to over $750 a month and our deductible is up over 1000% at $6,000 each up to $12,000 family. All I hear on TV is how it saved me money in ad. after ad. They say america votes its wallet and if my experience is anything like other middle class experiences then the party that passed this is about to get walloped. My concern is not cost of insurance which now is the second largest bill we pay monthly after the mortgage. (How out of whack is that/) what is concerning is we haven’t even felt the affordable side. The Government continues to delay issuing a schedule of fees for Doctor services and the rest. Once that side kicks in this plan is doomed. This control of payment to the health care provider is the same feature that stomped on HMO’s whey they tried to control health care provider costs in the 1990s. My other concern is the fallout after the plan is repealed. What parts stay and go. How will things be better? Repeal without a plan to succeed could be much worse that the devil we are attached to now.

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