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.

Obama Held on to the Presidency… What Does This Mean for Small Business?

Now that the presidential election is over, and the dust has settled a bit, we are left to speculate about what the next four years will bring. Whether or not you supported President Obama, it is hard to deny the uncertainty that still reigns supreme. There is much ado about fiscal policy, about staggering national debt, about income inequality, about homeland security, about natural disasters, about the world economy, and our ability as a individuals and as a nation to cope with it all.

For the owners of America’s smallest businesses, this chronic uncertainty has been bleeding into daily operations and management mindset, making an indelible impression on overall optimism and economic outlook, and in short, has changed the way small business owners do business.

Has anything changed now that the presidency has been set? Here is a rundown of some of the key issues affecting small business owners:

  • Obama’s re-election took away the uncertainty over The Affordable Care Act or “Obamacare” as it’s called, the President’s auspicious healthcare overhaul which is set to go into effect in 2014. It’s a legislative reality that business owners with 50 or more employees are going to have to deal with. (Businesses with fewer than 50 employees are exempt.) But, how all these changes will affect the healthcare industry “at the ground level” is still unclear, and even with all the checks in place, healthcare could still end up costing small business owners more.
  • The election process only deepened the partisan divide over taxes and fiscal policy. At issue is the imposing fiscal cliff, which is slated to go into effect in January 2013, barring any Congressional action. Going over the cliff will mean some $7 trillion worth of hard to swallow tax increases and spending cuts over the next decade. Here’s a brief summary of some of the key changes:

-Several Bush-era tax breaks are set to expire resulting in a 3 percent increase on individual income tax rates in 2013. Those making more than $388,350 a year, will see a 4.6 percent increase.

-Payroll taxes will increase to 6.2 percent from 4.2 percent. This will be particularly hard for small business owners who are both owners and employees of their businesses.

-The tax break for capital purchases will end. Under Section 179, if you purchased equipment for your business this year, you can deduct half the cost on your taxes right away and it counts as depreciation. In 2013, the depreciation rules will revert to their normal setup allowing you to only deduct the cost of equipment gradually, over the life of the asset.

-The Alternative Minimum Tax (AMT) may tax many middle class Americans, including small businesses. The intention of the AMT is to prevent wealthy individuals from using numerous deductions to significantly drive down their tax obligations so that they are effectively paying too little. But the threshold for those who are subject to the AMT is currently set at $150,000, an amount that will likely affect many middle class workers and small business owners. AMT also affects LLCs, partnerships, and S Corporations.

  • Obama’s re-election also ensures a continuation of quantitative easing- the Federal Reserve’s attempt at reviving the economy by artificially keeping interest rates exceptionally low. Why is this important to small business owners? The critics of quantitative easing, which are not surprisingly significantly Republican, point out that these policies have not helped the economy. Which ever way you hold, the Fed’s moves have an impact on inflation and the overall strength of the dollar- and that is something that can affect many small businesses, especially those who are involved in global purchasing or sales.

In short, though the question of who the next president will be has been answered, there still remain enough questions to keep small business owners” busy” for a while to come.