It’s no secret a lot of HR pros are not fans of President Obama’s Affordable Care Act. The main reasons include: compliance headaches and a belief that it’ll increase costs. But the White House is out to change the negative perception of the law.
In a blog post on WhiteHouse.gov, the Obama Administration outlined five reasons small businesses should love — not loathe — the Affordable Care Act.
Do you agree with any of these?
1. Exchanges level the playing field
According to the White House, small businesses pay 18% more on average for health insurance than larger firms. And it says the reason for that is small businesses don’t have the purchasing power that larger organizations do. The Small Business Health Insurance Option (SHOP) exchange implemented by the Affordable Care Act is supposed to change that.
“Small employers in every state will be able to shop for health coverage on a competitive marketplace,” according to the WhiteHouse.gov blog post.
One major selling point of the SHOPs is that they’d enable small employers to offer multiple plans to their employees without adding the administrative duties of offering multiple plans. Businesses would just pay a lump sum in premiums to an exchange, which would then distribute the money to individual insurance companies.
But in the spring, the Obama Administration delayed for at least one year the requirement that shops offer multiple plans to small businesses. The 33 state exchanges that are being run by the federal government are now only required to offer small businesses one plan option in 2014. The White House also said it would be willing to listen to proposals to delay the multi-plan requirement in some state-run exchanges.
2. Lighten administrative load
The SHOPs are also supposed to provide employers with “standardized, easy-to-understand information that will make comparing and purchasing coverage easier.”
As a result, the Obama Administration expects the law to help alleviate small businesses’ administrative struggles with offering a group health plan to their employees.
3. Tax credits make it more affordable
The White House says the small business tax credit to purchase health insurance for employees is already helping offset the cost of that coverage by up to 35% for some companies.
The tax credits are open to small businesses with less than 25 full-time equivalent employees. The fewer employees a business has, the more tax credits they have the potential to earn.
In 2014, the credit goes up 50% and will be available to qualified small businesses purchasing coverage via a SHOP.
4. Improved risk pooling
If a small business is viewed by insurers as having high-risk employees, obtaining affordable coverage can currently be very difficult. The SHOPs are supposed to help remedy that problem.
SHOPs are designed to throw high-risk employers in the same pool as low-risk employers. From there each SHOP’s premiums are supposed to be determined after looking at the combined population of participating employers.
5. Create healthier workforces
You’ve probably all heard that wellness programs help lower healthcare costs. Well, Obamacare allows employers to offer more attractive incentives to employees in an effort to encourage more workers to participate in company wellness programs.
For example: Currently, the maximum reward/penalty for participating/non-participation in a company wellness program cannot be worth more than 20% of an employee’s total health premium. But beginning in 2014, Obamacare will allow employers to impose incentives/penalties worth as much as 30% of an employee’s premium.
In addition, the law says that the maximum reward/penalty for programs designed to prevent tobacco use can be as much as 50% of an employee’s premium starting in 2014.