Effect of Obamacare on Businesses

Entrepreneur -

March 21, 2013:

If you are still fretting about how Obamacare will affect your employees and your bottom line, you are not alone.

While a small percentage of business owners who offer health insurance to employees have an improved understanding of what the “employee mandate” means, a majority of small-business owners continue to misunderstand the law, according to a survey released Thursday from the Mountain View, Calif.-based private online health-insurance exchange eHealth.

Of the 259 business owners surveyed, 56 percent misunderstand the employee mandate, an improvement from the 69 percent of survey respondents who misunderstood the mandate when eHealth conducted a parallel survey in August.

The employee mandate is a section of the Affordable Care Act that requires businesses with 50 or more full-time workers to provide health-insurance coverage for their employees. If your business has more than 50 employees and you do not provide health insurance, then you will be required to pay an annual penalty starting at $2,000 per employee after 20 employees, says Carrie McLean, the consumer health insurance expert at eHealth. If you have fewer than 50 employees, the health-insurance mandate does not apply to your business.

Another largely misunderstood component of Obamacare is the health-insurance exchanges. Almost two-thirds of respondents say they have no understanding at all of the exchanges. Twenty percent of respondents say they have a fuzzy understanding of the exchanges and only 18 percent of respondents say they can explain what an exchange is with confidence.

Health-insurance exchanges are marketplaces where businesses and individuals can shop and compare plans. The federal exchanges, which will become available in October, will make government subsidized health-insurance available for lower-income individuals who are not getting coverage through their employer. Also, the SHOP exchange – an acronym for Small-business Health Options Program exchange – will be an exchange where small-business owners can do the same thing, says McLean.

The confusion about Obamacare creates anxiety for entrepreneurs. Almost six in ten respondents say they think their costs will increase as a result of the looming reform and one third of owners expect the reform to affect their hiring plans in 2014.

The survey was conducted online between Feb. 12 and Feb. 15, by eHealth and polled small-business owners who had purchased health-insurance through eHealthInsurance.com and were still maintaining coverage for their employees. All respondents had fewer than 50 employees and 95 percent had between two and 10.

The survey results from eHealth likely reflect even less confusion than what is out there among small-business owners overall, since it surveys only those business owners who offer existing coverage and have therefore put some thought into the topic already, says McLean. “We actually compiled a list of calls that we were getting from customers -- small businesses -- and it was composed of 70 different questions that we are getting on a constant basis,” she says. “There is major confusion out there in the marketplace.”