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→How the ACA really affects small businesses
==How the ACA really affects small businesses==
The United States has almost 6 million small businesses, and 90% of these businesses employ fewer than 20 people ([http://obamacarefacts.com/obamacare-small-business/)]. And for the most part, there is not much evidence the provisions of the ACA are devastating these small businesses and startups with fewer than 50 full time equivalent employees.
The Affordable Care Act uses the language “full-time equivalent” (abbreviated FTE); a full-time equivalent employee is the total number of full-time employees plus the combined number of part-time employees hours divided by 30. Another criterion for determining mandate-exemption or tax-credit status in the ACA is the average annual wage of employees; average annual wage of a business is calculated by dividing the total wages paid by an employer by the number of FTEs, rounding down to the nearest $1,000 ([http://obamacarefacts.com/obamacare-small-business/)].
Most of the harms of the ACA, thus, are passed onto larger companies - firms with larger than 100 FTE (full time equivalent employees) - but many of these larger corporations also already offer health insurance coverage for their employees. However, companies between 50 and 100 FTE are required to offer the minimum health insurance coverage accepted by the ACA are implicated in a slightly more complex way.
Options for small businesses with fewer than 50 employees that still provide health care
Although, health care is not a mandatory service for small businesses with fewer than 50 FTE many small businesses still provide health insurance for their employees. These companies, along with large companies, are seeing rising premiums on their insurance due to the ACA stipulation that health care companies cannot deny coverage when considering an individual's health. However, there are options to compensate with the increased (while also non-mandatory) cost of providing health care, the most obvious of which would entail the end of employee-sponsored health insurance coverage by small businesses or simply increasing the employee contribution to coverage.
Small businesses can try to save on rising health care costs in various ways, such as participating in the SHOP Exchange, negotiating on private insurance plans, converting their employee group plans into individual employer-sponsored plans, such as Health Savings Accounts or Health Reimbursement Accounts (HSA’s and HRA’s), switching to direct primary care, or using Workplace Wellness Programs ([http://www.cnbc.com/2015/01/08/5-smart-ways-small-firms-can-slash-health-care-costs.html)].
===Between 50 and 99 Employees===
Small businesses with fewer than 50 FTE are exempt from the penalties of ACA; however, as soon as a company reaches the 50th employee mark, the hire becomes much more expensive, thus dis-incentivizing small businesses from expanding their labor force. Firms that employ 50 or more workers and don't provide health insurance must pay a tax penalty of $2,000 for each uninsured employee beyond the first 30. Furthermore, firms with 50+ workers are required to contribute at least 60 percent of the cost for individual minimum essential coverage. (http://www.ncpa.org/pub/st356). This 50th employee marker serves as the reason why many critics of the ACA believe that Obamacare is killing jobs, as well as the reason why many small business owners have concerns about expanding their businesses.
“A survey of more than 600 small business owners by the Society for Human Resource Management found that more than four-in-10 small business owners have delayed hiring due to uncertainty about the effects of the Affordable Care Act. One in five reported they have cut the number of workers they employ. The Society for Human Resource Management also found about one in five small businesses are reducing workers' hours to part time because they are not required to offer coverage for employees who work less than 30 hours per week.41 Those employees will be eligible for subsidized coverage in a new health insurance exchange.” (exchange” [http://www.ncpa.org/pub/st356)].
Companies with between 50 to 99 employees are required to provide insurance, but the penalties imposed for not complying with the ACA requirements were delayed until 2016, while the penalty for companies with > 99 employees was delayed until 2015. Because of these delays it is not entirely possible to fully understand and analyze the exact effects of the ACA on small businesses that are required to provide health insurance to its employees.
==SHOP Exchange==
