How Obamacare Will Impact Your Business This Year

Written by: Natalie Klyashtorny

As The Affordable Care Act, which is commonly referred to as Obamacare, goes into effect, it will have a financial impact upon small businesses throughout the United States.

Starting this year, the federal government is imposing a new tax on health insurance carriers based upon their share of the so-called “fully-insured market”, which is primarily comprised of the type of health insurance plans commonly purchased by small businesses. Although imposed upon health insurance carriers, this will operate as a de facto tax upon small businesses as many of these carriers have already acknowledged that they will pass the added cost onto employers, potentially resulting in an increase in insurance premiums of 2% to 2.5%.

On the positive side, businesses with fewer than 25 employees will be able to take advantage of a tax credit of 50% of the cost of their health insurance plans if they opt to buy the plans from the new government-run small-business exchange.

Additionally, as of this year, for businesses with no more than 50 employees, health insurance carriers will be prohibited from basing premiums for new plans upon certain criteria, such as the company’s industry, claim history or the gender of their employees. Furthermore, health insurance carriers will not be able to refuse health insurance coverage based upon the health status or a pre-existing condition of a company’s employees or their dependents.

There are several provisions of Obamacare which have been deferred into the future, however. The most significant one is the so-called “employer mandate”, pursuant to which businesses with 50 or more employees would otherwise be required to offer sufficient health insurance coverage starting in 2014 or face the imposition of a fine.  The Obama Administration announced that it would refrain from penalizing employers which do not comply with this mandate in 2014, thus deferring the mandate until the start of 2015.

The United States Department of Labor also announced that it would defer requiring businesses with 200 or more employees to start automatically enrolling new hires into their health insurance plans or imposing penalties on businesses which wait longer than 90 days to allow new employees to enroll in the company’s health insurance plan.