Obamacare Offers More Questions Than Answers for Small Business Owners

Well, the Affordable Care Act (ACA) has definitely gotten off to a rocky start. After its website, Healthcare.gov, officially opened for business, allowing uninsured Americans from 36 states to purchase health insurance online, it was quickly plagued by glitches that prevented many users from successfully signing up for an insurance plan. These hiccups have persisted, prompting critics of the ACA to call it a failure.

drWhile it’s too soon to tell if Obama’s signature legislation will go the way of the dodo bird, the whole episode is just one more point in an already confusing health care landscape for small business owners.

One of the corner stones of the new plan is the SHOP Marketplace, scheduled to fully open in 2014. The SHOP health exchange market place is a Web portal where eligible small businesses with up to 50 employees can shop for and buy private health insurance for their full-time employees.

The goal with this online marketplace is to supposedly give smaller businesses the advantage of group purchasing power and just make the whole system more affordable. In some cases, small businesses may be eligible for a tax credit on employee premium payments.

The problem is that there are still many unknowns, like how much smaller businesses will really end up saving. All the delays on top of the on-going government shut down brings up the question of when the system will actually be up and running as planned, or if it ever will. This is particularly agonizing for those small businesses that are required by the new law to provide an employer-based healthcare plan in 2014.

All of this brings up many questions- especially for those running a small business hovering around the 50 employee mark:

Should you offer employer provided coverage or not? If you are employing fewer than 50 people, then you won’t be required to provide coverage. But, health benefits play a significant role in employee satisfaction. Deciding whether or not you are going to offer a health plan to your employees is a choice that affects more than just your bottom line; it also affects employee morale and retention.

Should you risk hiring more than 50 employees? If your business is going through a growth spurt and you need additional workers that will put you past the 50 employee mark, should you hire now or hold off till things settle a bit? The government has delayed the implementation of the employer mandate until January 1, 2015. After this grace period, small businesses face steep fines for each employee not covered by a plan. It may be worth the “risk” to hire now and see how much revenue those extra hands bring in.

What kind of health coverage should you offer? If you would like to provide some kind of coverage for your workers, but money is a concern. What are your options, especially given that healthcare costs are still very much on the rise?

According to the new legislation, the health care insurance provided by the business must pay for at least 60 percent of health care expenses, and employees may not be forced to pay more than 9.5 percent of their family income (before deductions and adjustments) for their employer-sponsored coverage. However, how you as a business owner are supposed to know the amount of “family income” of your employees is not yet addressed. The U.S. Department of Health and Human Services (HHS), on their healthcare.gov site, also defines a “comprehensive package of items and services, known as “essential health benefits.”

That’s a pretty hefty list of requirements that can feel like even more of a burden if you are struggling with lackluster sales.

The bottom line: as Obamacare starts kicking in, it seems that it’s generating more questions than answers for small employers. For now, the safest thing may be to wait it out a bit- at least until some of the most prominent kinks get ironed out.

Insuring Your Employees Without Losing Your Shirt, or Theirs

If you own or manage a small or medium size business, maintaining or even obtaining health insurance for your employees is one of your leading concerns, just as it is for your employees. According to a brochure put out by the Georgia Small Business Development Center, employees overwhelmingly consider health insurance to be the most important fringe benefit a business offers them.

Kaiser’s Health Tracking poll for June 2013 found that more than 70% of young adults aged 18 to 30 surveyed said that health insurance was very important to them and worth the price. Of uninsured Americans, “obtaining insurance” was very important to them. Cost was the biggest barrier to obtaining it, either on their own or from their employers. And with reason: the national average cost of employer-sponsored health insurance for an individual is $468 a month and $1,312 for a family of four.

Most small and medium size employers must look their employees in the eye and answer to their communities. As human beings, we want to do right by others even as we know it is also in our best interests. According to the Department of Labor, recruiting and employee turnover account for about 30% of small businesses their salary expenses.

America is one of the few developed countries that link health insurance and health care to employment. Until this changes here are some tips to help you save money when purchasing health insurance for your employees.

  • Go to http://www.hhs.gov/healthcare/ and navigate to the Insurance Marketplace. This marketplace is meant to allow individuals and small businesses to compare health care plans, ask questions and learn about eligibility for tax credits on insurance and health care plans. Open enrollment will begin in October for January 2014.
  • If you employ up to 25 employees, you’re probably eligible for a tax credit of 35% to offset the costs of insurance. Links to further information are here.
  • Go to your state’s insurance commissioner’s website for similar information tailored to your state.
  • Your state may have a plan to subsidize or reduce the cost of employee health insurance.
  • If you can join a cooperative in your state or city, do so. Cooperative associations allow businesses to negotiate more favorable rates for purchase health insurance by creating a larger pool of insured, lowering the insurers’ risk and lowering premiums.
  • Ask if your professional or trade association allows you to purchase coverage through it for you and your employees. Your local Chamber of Commerce may offer such a service to their active members as well.
  • Talk to your employees and find out their needs. If the fit is right, consider a non-traditional arrangement, such as high-deductible insurance plans combined with Flexible Spending Accounts, Health Savings Accounts or Health Reimbursement Accounts. These plans allow you and your employees to contribute pre-tax dollars and may accumulate from year to year.
  • Find an honest insurance broker who cares about finding the best plan for her/his clients. One excellent way to do this is ask business people you know: word-of-mouth referrals from people you trust are advertising money can’t buy.
  • Contact your state insurance commissioner to check for sustained complaints, both about your broker or about whatever insurers and plan(s) you are considering.
  • Any company that you decide to purchase a plan from must be licensed in your state. In addition to your state insurance commissioner, an excellent resource for consumer information about health plans is the National Association of Insurance Commissioners.

You may also choose to self-insure your employees but you should do this without having a risk analysis and a cash-flow analysis performed. Even if both analyses indicate that self-insurance is prudent, you should buy a stop-loss plan that limits your loss if claims—whether by an individual or in the aggregate—exceed a pre-determined limit. The Self-Insurance Institute of America is a good place to begin your research.

The larger solution is to become politically active and work towards the health care solution you believe in, be it single-payer health care, fee-for-service, or something in between. “Becoming politically active” however, does not mean engaging in the vitriol, ignorance, cruelty and vulgarity that has so contaminated America’s political discourse and dead locked the political process. Rather, it means reasoning as a citizen with other citizens: speaking to each other in civilized, dignified, rational language about the country we share, the lives we want to lead and how we wish to live together.

5 Resolutions for Small Business Owners in 2013

The new year hasn’t even arrived, yet many small business owners may be wishing the clocks would go backwards. With big issues such as the Fiscal Cliff and the early stages of health care reform slated to go into effect on January 1st, there’s little wonder why.

But even if 2013 looks a bit rough from the outside, it doesn’t mean small business owners should be sticking their heads in the sand. If you are running a small business heading into the new year, here are five resolutions that you can make to keep your business on course:

1. Work on focus. If there is one thing that small business owners should have learned from the 2012, it’s that bigger businesses are pulling out all the stops when it comes to acting like a small business. This is evinced by the push for personalized service and same day delivery. To survive, small businesses have to be hyper-focused on their niche market, only providing the products and services they can truly deliver with quality.

2. Work those networks. Another big resolution for 2013, is to work on partnering with other businesses and professionals. Now more than ever, small businesses need to pool their resources in order to be more competitive, more relevant, and more profitable. This goes for businesses based both online and off-line. Even if you are not a natural when it comes to networking, in the new year the success of your business may depend on how well you can reach out to other business owners.

3. Work your customer service. One of the biggest assets a small business can have these days is also one of its most elusive: customer loyalty. I just saw an article at Business Insider about a Zappos customer service representative who spent a mind boggling 9 hours and 37 minutes (!) with a customer on the phone (they weren’t talking business the whole time… but, still…). Now, obviously you can’t afford to go that extreme with your customer service, but you can make a commitment to revamp some of your customer loyalty programs in 2013, and try to improve your overall customer service experience.

4. Work your online reputation. In these heady days of social media, a business’ reputation can literally be made or broken in an instant. The range and speed with which information is exchanged today is unprecedented. Another commitment for 2013, is to improve your online reputation. This includes: staying in touch with what people are saying about you online, ensuring that you business’ profile information is accurate, up-to-date, and complete, and in short, ensuring that your business is being properly represented.

5. Work your cash flow. Last, but certainly not least, is to re-evaluate how you manage your cash flow. If you haven’t yet learned your lesson from the chronic economic difficulty or any of the natural disasters that have happened in 2012, then make a commitment to incorporate strategies, such as creating an emergency fund, and using financing tools, such as a business cash advance or accounts receivables financing, to help you be prepared for emergency expenses and ultimately smooth out the flow of working capital in your business.

In short, as a small business owner, if you make it a point to truly focus on any of the areas mentioned above, then it may be just what you need to get your head out of the sand and paint a brighter picture in 2013.

Concerning Health Care Costs: It’s Up Up and Away

Many small business owners these days have been smarting from a health care headache as they try to offset the rising cost of care in the midst of a sluggish economy that has eaten away at profit margins and stymied growth. Now, a recent study conducted by PwC Health Research Institute suggests that the headache may be developing into a persistent migraine. According to the study, medical costs are expected to increase 8.5% in 2012, up from a hefty 8% recorded in 2011.


The researchers named three factors that are likely to contribute to the trend in medical cost increases:

1. More consolidation in the health care industry means less competition and higher costs. As smaller health care providers are either absorbed into bigger health care entities or are forced out of the market, that means fewer choices for consumers and small business owners alike. With less competition, health care providers have more room to raise prices when and where they want.

2. With more people on Medicare and Medicaid coupled with payment reductions, hospitals and health centers must foot the bill. According to the report, patients who receive care backed by a private insurer compensate hospitals above the actual cost of care (on average 134%), while the Medicare and Medicaid reimbursement is below actual cost (approximately 90% of the total actual cost). As more people join the ranks Medicare and Medicaid patients and their expected contributions to these programs decline (thanks in part to the recently approved health care reform act), hospitals are shouldering more of the cost. This added burden will be passed on the those with private plans.

3. With more stress, more problems… As the number of Americans fighting depression, anxiety, and stress increases in response to the recessionary fallout, stress-related health conditions have been on the rise. This trend is coming at a time when many have put off seeking care in an effort to keep health care costs to a minimum. Both factors will no doubt increase the demand for costly health procedures and claims in general and thus raise the cost of health care across the board as insurance companies and hospitals try to reclaim some of their “loss.”

Aspirin anyone?

Midterm Elections: What’s at Stake for Small Businesses?

Political pundits are predicting heated congressional elections this November. Republican supporters are determined to retake both the Senate and the House on the coattails of growing skepticism and discontent among voters with the current administration. If the Republicans succeed in increasing their number of seats, small business owners can expect to see changes in major legislative issues that affect them.


Healthcare reform is a central target of Republican law makers. They have pledged to change the plan President Obama implemented. Small business owners who have been opposed to new requirements to offer healthcare coverage to employees may feel vindicated if the Republicans manage to repeal the healthcare bill.

Also at stake in the $30 billion proposal by President Obama to encourage lending to small businesses. The Small business Lending Fund Act was passed by the House of Representatives without any Republican support. Republicans are strongly opposed to the plan, which they say resembles the $700 billion Wall Street bailout. So, if the Republicans prevail, small firms will probably continue to have difficulty accessing credit from banks.

Despite his promotion of the Lending Fund Act, many small business owners have been unhappy with President Obama’s performance. The American Small Business League reported failures by the Obama Administration to effectively help small businesses. Among their complaints are the failure to stop the diversion of federal small business contracts to large corporations, the failure to allocate more stimulus funds to small businesses, and the failure to fund women-owned businesses.

Yet, given a Republican majority chances are these requests will fall flat. The GOP’s focus historically involves spending cuts and deficit reduction, rather than on stimulus payouts.

Regardless of which party triumphs in the coming elections, small business owners may have to accept several changes in the policies that impact their operations the most.

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Health Care Reform: A Major Concern for Small Businesses

Over the past few weeks the Obama Administration has placed the topic of health care reform front and center on the national agenda. The move has sparked fresh debate, concern, and anxiety among politicians, consumers, business owners big and small, as well as health industry experts and representatives.

Most agree that something must be done to change a system where approximately 45 million people across the US are uninsured and that oversight should be extended to regulate a health insurance industry accused of using deliberate and questionable tactics to maximize profits, such as raising premiums, co-pays and deductibles, refusing coverage or charging exorbitant rates to people with pre-existing conditions, and even retroactively denying coverage to people with established policies.

But exactly what will be done in the end is still very much up in the air, and this has been a subject of much concern among small business owners in particular.

It is estimated that about half of those who are uninsured are people who are either self-employed or who work for small businesses. While most big companies still provide health benefits, an astronomical rise in insurance premiums over the last decade has help to create a situation where many small businesses can no longer afford to cover their employees.

There are really three key issues in health care reform of particular concern to small businesses, namely: employer mandates, the creation of a government-run, public insurance plan, and changes to the tax code.

With employer mandates the government would require businesses to either provide health insurance to their employees or pay a fee to the federal government. This may be too much of a financial burden for very small businesses- especially in the present economy. The establishment of a public health plan could provide much needed competition to private insurers and reduce the cost of health insurance. But some fear that this will drive private insurers out of business. Finally, various changes to the tax code have been proposed, of mention are several tax increases, such as taxing some employer-provided coverage, and small business tax credits to help offset the costs of providing insurance.

Whatever the actual outcome of the health care reform bill, the relationship and involvement of small businesses to health benefits is likely to change… for better or for worse.

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