Obama Care is Coming

Change is a-coming on the health care front. Obamacare is making sure of that. Otherwise known as the Patient Protection and Affordable Care Act, this 2400-page bill, passed into law in 2010, is confusing and worrying an awful lot of small business owners.

 

What Does it Mean for Business ?

The Act originally stipulated that every American citizen must have health insurance as of January 1, 2014; the date has since been pushed forward to the beginning of 2015. The impact for business? The bill also requires employers to make quality, affordable health insurance available to their full time workers. This simple task sounds like it carries the potential for a huge – and perhaps expensive – hassle. But a closer look at the details of the bill will give a clearer perspective on the situation.

How Small is Small Business and What is Full Time?

Small businesses are exempt from the requirement to provide health insurance, but must inform their workers about the Act. According to the PPACA, a small business is one that employs fewer than 50 people full time. Should an enterprise of this size voluntarily opt for employee health insurance, it must comply with the new law. Employers of more than 50 workers are subject to fines if they fail to come through. For the purpose of the PPACA, a full time employee is defined as working at least 30 hours weekly or 130 hours monthly, on average.

Are You Exempt?

At this point, you may be breathing a sigh of relief if you calculate that you have fewer than 50 full time employees. Not so fast. If your business is seasonal – say a tourist gift shop or a ski resort – the folks in your employ can be assessed as FTE (full time equivalent employees). FTEs, who average 120 hours of work in a month, or work for a period longer than 4 months, are also eligible for the health care provision.

Confused yet? There’s more. Less-than-50-employee enterprises with a common owner may be grouped together for purposes of this law.

What’s in Store?

Marketplaces for health insurance, called “exchanges,” are part of the plan, to be run by individual states. These will include Small Business Health Options Program exchanges for firms with fewer than 100 employees. SHOP, as it is dubbed, will facilitate small businesses cooperating to increase their joint health insurance purchasing power. However, it’s up to the states to decide whether to limit SHOP eligibility to businesses with <50 employees rather than <100.

Good News

The good news is that once an enterprise is part of SHOP, it may continue to participate even if the number of its employees increases to over 100. More good news: a small business tax credit is available for two years to cover 50% of the cost of health insurance premiums on plans purchased through SHOP. Even more good news: PPACA will make affordable health insurance more available to small business owners themselves. Eighty-three percent of entrepreneurs who presently have no coverage whatsoever will become eligible for health insurance under the provisions of the Act.

Shop Around

Despite the appeal of purchasing insurance via the Small Business Health Options Program, it pays to shop around. Self-insurance may turn out to be a better choice in terms of price and/or benefits.

The Bottom Line

Looking at the facts regarding its impact on small business, it seems that Obamacare, far from being a bogey bill, may actually be of benefit to employers as well as employees. As Richard Lorenzen wrote in Forbes recently, “The Affordable Care Act … enables us to provide a better life for those who help make our success possible everyday.”

 

For detailed information on the provisions of the PPACA, see the US Department of Labor’s Affordable Care Act Regulations and Guidance.

The Top 5 Concerns for Small Business Owners in 2013

As 2012 comes to a close and the new year looms ahead, small business owners have a got a lot on their minds, and it isn’t just their holiday sales. According to the Bank of America Small Business Owner Report put out last Thursday, the majority of the nation’s small business owners are wary about the economic outlook in 2013.

Which issues were the most pressing according to the report? Here is a rundown:

1. The Effectiveness of the U.S. Government Leadership. A total of 68% of respondents reported that the ability of our leadership to, well… lead!, is a major concern heading into 2013. With all the posturing and finger pointing that we have witnessed over the past two years in particular, this is not surprising. It underscores a rising tide of apathy and a collective vote of no confidence that many Americans are holding, even across party lines.

2. The Cost of Commodities. Another major concern that affects businesses of all stripes is an impending rise of commodity prices. The commodity price charts, for products such as oil, wheat, and corn, h like a roller coaster ride this whole year. A current business owner who was in business in 2008, when the cost of commodities skyrocketed upward, would understandably be uneasy. Indeed, 66% of small business owners listed in as a primary concern in 2013.

3. The Cost of Healthcare. Even with the Making Healthcare Affordable Act set to go into affect in 2014, many owners of small companies ( a full 65% of those surveyed) are still very worried about the rising cost of healthcare, and it’s little wonder why. The cost of healthcare continues to outpace wages and inflation going into 2013.

4. Consumer Spending. Whether we like it or not, in America consumer spending drives the nation’s economic growth. So when consumers start restraining their spending it doesn’t bode well for the businesses they frequent, nor the economy at large. According to the NFIB Small Business Optimism Survey, weak sales is still the reported as the number one business problem for 22% of owners surveyed. According to the Bank of America survey, 64% of small business owners are concerned about consumer spending, and it’s a trend that will likely continue well into 2013.

5. The Strength of the Dollar. The fallout of doing business in a global economy is that profits are strongly tied to international currency exchange rates. The strength of the U.S. dollar rounds out the top five small business concerns at 63%. This is likely do to the fact that all the uncertainty surrounding the U.S. economy as well as other major global economies, such as the European Union, create volatility. For some, a weak dollar means more expensive global purchasing and outsourcing relationships. For a few businesses, a strong dollar may be a problem- especially if they rely on foreign customers ave looked.

The Best Healthcare Options for Small Business Owners & The Self-Employed

Underlying all the political rhetoric regarding the state of U.S. Healthcare, underlying all the finger-pointing and posturing about how it should be fixed, who should fix it, and when, the fact is many people are struggling to afford adequate healthcare for themselves and their families. Among the nation’s small business owners and the self-employed in particular, recent statistics shed light on some alarming trends.

In a recent post at Small Business Trends, Scott Shane made the following observation based on statistics from the Kaiser Family Foundation’s annual survey on employer health benefits, “…since 1999 [till 2008] the average cost of employee health insurance premiums (for family coverage) has risen 84 percent in inflation adjusted terms (148 percent in nominal terms).” He then goes on to point out, “But between 1999 and 2008, the revenues at the average American company fell 5 percent in inflation-adjusted terms. Over the same period, employee health care premiums went up 64 percent when measured similarly. The rapidly rising cost of employee health insurance means that the cost of health insurance has increased from 5.4 percent of total worker compensation in 1999 (PDF) to 7.7 percent in 2012 (PDF), according to Bureau of Labor Statistics data.”

These statistics certainly don’t paint a pretty picture. Furthermore, underlying these trends is that fact that if small businesses simply give up on health insurance, they can experience ramifications that extend way beyond lost healthcare benefits. For small business owners and the self-employed, lack of adequate healthcare can also mean the loss of key employees and work productivity. Employer-sponsored health insurance is one of the benefits workers value the most. Offering employees a health insurance plan can help small businesses hire and retain the best workers.

That said, there are ways to obtain healthcare even for cash-strapped small business owners and self-employed professionals. The following are the most popular (and successful) methods of keeping healthcare related costs manageable.

Research your options. If you want to ensure that you get the best healthcare coverage to suit your situation then you have to do some research. Specifically you want to pay attention to the size and nature of a plan’s deductibles, out-of-pocket expenses, and any caps on coverage, as well as policies on health maintenance and wellness visits. Keep in mind that a lot of this changes if you have a pre-existing condition. You should also be aware of the various tax incentives for small business owners to encourage employer-sponsored healthcare coverage.

There are numerous sites online that can help you connect with your affordable healthcare opportunities. For starters, be sure to check out the following sites:

Join a membership organization. Even if you’re in business for yourself, there are a number of both industry-specific and general business membership organizations you can join to help reduce your healthcare costs via association-sponsored healthcare plans. These plans allow small business owners to purchase coverage through their membership in the organization. Often, these plans offer significant discounts in health coverage; you may have a nice selection of options to choose from as well. But before signing up, make sure to check with your State Insurance Department to make sure the plan is insured with an organization licensed with the state. Because many association-sponsored plans are multi- state, you can also consult the National Association of Insurance Commissioners (NAIC) Web site.

Alternatively, you could check out the AARP if you are over 50. If you are running a small business then you can inquire about healthcare plans at your local Chamber of Commerce and the Small Business Service Bureau. If you are self-employed you can check out the plans offered by the National Association for the Self-Employed.

Rely on the high-deductible/HSA combo. One strategy to reduce healthcare costs while still maintaining coverage is by signing up for a high-deductible insurance plan coupled with a tax-advantaged Health Savings Account (HSA). The funds contributed to an HSA are not subject to federal income tax at the time of deposit. Unlike a flexible spending account (FSA), if the funds are not spent, they can be rolled over from year to year. HSAs are owned by the individual and may be used to pay for qualifying medical expenses at any time without federal tax liability or penalty.

Join a discount health benefits program. For a small fee these programs offer savings on prescription drugs, dental visits and other health services by connecting members with affiliated doctors, dentists, and health centers. In this way, a health benefits program can fill in any gaps in coverage from your existing health insurance policy.

Look into specialty supplemental policies. As insurance premiums continue to rise, putting extra financial burden and risk on the shoulders of small business owners and the self-employed, the insurance companies themselves realize that they’re just created a market for a new set of insurance products. These “supplemental policies” are being introduced all the time. One example is a policy that ensure that out-of-pocket costs from an accident or critical illness do not endanger company finances. Such a product could be useful to a self-employed, independent business owner like who has a risk of injury in a day-to-day routine.

Get group coverage even where there are no employees. Small group health insurance plans cover between two and 50 employees, and the larger your group, the lower your premiums will be. Small businesses with only a few employees and self-employed individuals have the option of creating a group purchasing alliance with other small businesses and individuals to offer employer sponsored health coverage. You can locate a purchasing coalition on your state Department of Insurance (DOI) website. Be aware that there are special tax incentives available to businesses providing group coverage to employees, and no one in a group can be turned down due to a pre-existing medical condition.

Initiate a wellness program. Seek free or low-cost advice on maintaining a healthy diet and following an exercise plan and get your employees involved. Encourage your employees to attend wellness seminars and to avoid or reduce unhealthy habits, such as smoking and eating junk food. Take advantage of free health screenings at local clinics, hospitals or health fairs. In the end you and your employees will feel better, and that could mean fewer trips to the doctor.

Why Investing In Your Employees Makes Good Business Sense

Is investing in your employees good for business? According to a new report, “Profit at the Bottom of the Ladder,” (Harvard Business Press), the answer is unequivocally, “Yes.”

 

Jody Heymann, who led the study behind the report, researched twelve companies in nine countries. Every company had policies that improved conditions for their lower-level workers. She examined how they succeeded despite spending on non-essentials, such as employee education and healthcare. In every case, investment in workers improved companies’ bottom lines.

The study credits several employee-focused tactics with increasing companies’ productivity and reducing their costs. Here’s a list of some examples:

  • On-site healthcare: SA Metal opened its own health clinic, so employees wouldn’t have to waste work hours traveling to doctors. Employees’ needs were served, and they produced more for the company.

 

  • Training and career opportunities: Xerox Europe, frustrated by high turnover rates of call center employees, started highlighting career opportunities within the company. Within one year, 20% of its low-level employees were promoted to higher-level positions. Workers who sensed a better career future were more likely to continue working at the company.

 

  • Listening to employees: Great Little Box Company offered a cash incentive to employees who suggested ideas that saved the company money. An employee suggested an additional use of an existing machine, thereby increasing productivity. The “hands-on” workers often have the best ideas for improving tasks.

 

  • Flexible vacation policy: Autoliv Australia saw its worker turnover decrease significantly after implementing a more flexible policy about leaves and vacations. Workers with a sense of autonomy feel more positive about their jobs.

 

  • Improving teamwork: American Apparel assigned its workers to teams, and then paid individuals based on team output. That incentive led garment production at a one of its factories to triple. Encouraging employees to work together increased productivity.

 

Positive employee conditions generate financial success. An investment in your employees equals an investment in your business.

An Obama Presidency = A Headache for Small Businesses?

[image source: Anthony Baker]

With a sputtering economy and an uncertain future, issues such as tax reform, health insurance, and worker’s benefits are weighing heavy on the minds of entrepreneurs and small business owners. For many, how the candidates for the US Presidency stand on these issues alone can be the deciding factor come voting day.

So who is the favored among small business owners?

Though both Obama and McCain have been pledging their support to established and up-and-coming small businesses, a close look at their policies reveals sharp differences in strategy and mindset.

If elected, Obama pledges to eliminate the capital gains taxes on start-up and small businesses as well as offer a $500 credit to self-employed small-business owners to offset the self-employment tax. He also plans on freezing the dreaded estate tax rate at 45% .

To encourage entrepreneurship, Obama wants to further develop a network of business incubators in communities throughout the nation with an emphasis on disadvantaged neighborhoods.

Many of Obama’s policies are actually more focused on the workers themselves. He plans on raising the national minimum wage from $6.55 to $9.50 an hour and requiring all employers to automatically enroll workers in 401(k)s or IRAs. Obama would further require all employers to either offer a health plan, contribute money to a worker ‘s health costs, or pay a percentage of payroll to a national public program. Obama also supports the right of workers to bargain collectively and strike without fear of losing their jobs.

While many of Obama’s policies may be good for the average worker, it puts an added strain on businesses that are already seeing their bottom lines erode as the price of commodities and healthcare continues to skyrocket and the financial markets limp along. Such a strategy can make it harder for small businesses to hire and hold on to talent.

On the other hand, McCain’s platform appears more friendly to small businesses.

He plans on granting small businesses an immediate deduction on the cost of new equipment and technology purchases. He also wants to establish a permanent tax credit equal to 10% of the wages spent on R&D. Further tax reforms include: Reducing the corporate income tax rate to 25% from 35%; cutting the estate tax rate to 15% and increasing the exemption to $5 million.

In the area of healthcare, McCain pledges to make healthcare coverage less employer-centric by issuing tax credits allowing individuals to purchase personal, portable health insurance that will stay with the person even with a change in job.

McCain also supports a ban on Internet taxes as well as any new cell phone taxes.

According to a recent survey conducted by Suffulk University, many small business owners feel that McCain will better suit their interests.

Who will you be voting for in November?