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(http://www.forbes.com/sites/hollymagister/2014/04/30/5-6m-small-businesses-blindsided-by-obamacare/#fd60fda45ffe)
ACA and Entepreneurship (view source)
Revision as of 15:22, 27 September 2016
, 15:22, 27 September 2016no edit summary
While the ACA has received significant backlash for its perceived potential detriment to small businesses, for the most part, small businesses with fewer than 50 FTEs are not significantly burdened by the ACA. In fact, companies with fewer than 50 FTEs, which make up an overwhelming majority of small businesses, as evidenced previously, are exempt from the employer mandate.
However, the ACA’s small business size qualifications differ from the Small Business Association’s (SBA) established summary of size guidelines that defines which businesses qualify "as a small business concern for SBA and most other federal programs.” [https://www.sba.gov/contracting/getting-started-contractor/make-sure-you-meet-sba-size-standards/summary-size-standards-industry-sector] SBA guidelines, a small business includes mining and non-manufacturing firms that employ under 500 employees and non-manufacturing firms that accumulate an annual receipt of less than $7.5 million in average annual receipts for non-manufacturing firms. Considering the SBA’s broader guidelines, while there may exist classifications that distinguish even further within industries, it is clear that that the ACA defines a small business much more narrowly than current SBA standards.
Still, there are almost 6 million small businesses that fall under small business size classifications in the United States, and 90 percent of these small businesses employ fewer than 20 people . [http://obamacarefacts.com/obamacare-small-business/]. More precisely, 61 percent of firms employ between 3 and 9 employees, and 98 percent of firms employ between 3 and 199 employees. [5http://files.kff.org/attachment/report-2015-employer-health-benefits-survey] Thus, the ACA’s employer mandate will only apply to relatively “larger” small businesses, firms that employ more than 50 FTE employees.
Obamacarefacts.com states that the 5.8 million small businesses in the United States that employ under 50 employees will not be penalized for not providing health coverage to their employees. However, many small businesses are providing health insurance for their employees, with 96% of firms that employ under 50 FTEs already covering full time workers. These firms, along with larger companies are paying higher premiums, as the cost of health insurance rises. If employers with fewer than 50 FTEs find themselves unable or unwilling to match the rising costs of health insurance premiums, small firms may be forced to discontinue employer-sponsored coverage.
Because insurance companies can no longer “conduct medical underwriting to determine the risk associated with an applicant or a pool of applicants when it priced its insurance premiums,” small businesses that choose to provide health insurance for their employees will face rising premiums and increased regulation in providing health insurance. Under the ACA, insurance carriers are no longer allowed to utilize a risk rating process to value premiums in the small business market, and only three factors may considered in determining premiums: age of the insured, place of residence, and tobacco usage. With carriers unable to rely on health factors to compute the risk of its insured, the cost of providing insurance depends on the insured’s relative age, as well as the state in which they reside in, more heavily than before. (source[http: //www.forbes article at bottom of page).com/sites/hollymagister/2014/04/30/5-6m-small-businesses-blindsided-by-obamacare/#fd60fda45ffe]
A small business may attempt to avoid and alleviate the increased costs of insurance coverage by opting out of employer-sponsored health care or increasing the employee contribution to coverage if possible with cost-sharing. Additionally, firms might also consider participating in the SHOP Exchange; negotiating on private insurance plan prices; and switching from group plans to individual employer-sponsored options, such as Health Savings Accounts (HSA), Health Reimbursement Accounts (HRA), and direct primary care [12].
==References==
==Google Doc==
https://docs.google.com/document/d/1LRo0zxfeBuXyaZf4-XW-oESsboz_P5PNBy3VlHVcXqA/edit
