New Obamacare Rules Could Impact Your Business
It’s clear that 2016 could be a pivotal year for many small businesses, as the Affordable Care Act (ACA) insurance rules begin applying to a new, expanded pool of them. Consequently, many small businesses…perhaps including some ZarMoney cloud accounting customers…may opt to insure themselves rather than remain within the parameters of the ACA, or more familiarly Obamacare, law’s marketplace.
This could be a major change since, up until now, self-insurance was largely a choice associated with large companies boasting a workforce of 200 or more. In this scenario, the company pays directly for its employees’ health care, rather than buying insurance under the Obamacare guidelines. It’s a gambit with some risk since an enormous medical claim by one employee could significantly dent a firm’s balance sheet.
Defining Size and Risk
What’s the reason why this alternative insuring option is now being viewed more closely by small businesses? Well, in 2016 the Obamacare law will define a small business as one with 50 people or more…rather than the old standard of 100. With more companies falling under these new regulations, those with younger, likely healthier workers will often take their chances on their own, instead of paying the higher ACA market prices. Should a good percentage go in that direction, this could drive up prices, making it tougher for companies with older, sicker personnel to fend for themselves.
Within the Obamacare rules, there is not that much difference in premiums, based on employees’ ages and health. While this could financially benefit a company with older personnel, conversely it’s why a firm with younger workers might find it appealing to self-insure, tapping into lower overall rates. After all, why be locked into the ACA’s community ratings when you can be providing insurance for considerably less cost,while the odds of not having to pay off substantial claims are in your favor? So the question now becomes, are the savings significant enough with just 50 or so workers to go this independent, admittedly riskier route? After all, should there be a catastrophic medical claim within a smaller company, less ways to spread the cost around are available.
There is, however, an entire industry that sells “stop-loss insurance” to self-insuring companies, safeguarding them against particularly expensive claims. In addition, many state insurance commissioners have been discussing the feasibility of changing the way coverage is regulated. In essence, it could be treated more like regular health insurance in the future.
The New Cost Impact of Doing Business
So what happens to small businesses that remain in the Obamacare market, those who continue to get their coverage there? Just as these new regulations could drive prices up for larger companies, it could do the same for those small companies who opt for the status quo.
According to one expert associated with the Kaiser Family Foundation, “The market effect could be quite substantial if a significant number of younger and healthier small businesses decide to self-insure and pull themselves out of the (Obamacare) risk pool.”
Considering that an estimated 40 million Americans are employed by firms with100 employees or less, this represents a very significant market whose impact could be substantial. So the Affordable Care Act continues to create uncertainty among businesses of all sizes and stripes looking for affordability, whether in their cloud accounting software, supplies or health care costs. Delays, changes and confusing ACA verbiage have many companies scrambling for their attorneys and accountants alike.
With the United States now spending $8,713 per person on health care each year, more than double the average of other developed countries, it is clear that businesses both large and small are wary of any more rising costs. Sharpening the pencil and finding ways to stretch those health care dollars is especially paramount. Particularly for those businesses in that “tweener” spot with just over 50 employees, the question of exactly how to insure will likely be a major topic of conversation this year.