Affordable Care Act creates concerns for small businesses

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By Rebecca Roscoe

Hidden taxes, additional costs and a lot of uncertainty face small employers as they begin dealing with the fallout of the Patient Protection and Affordable Care Act.
PPACA, commonly called Obamacare or the Affordable Care Act, was signed into law by President Barack Obama in 2010. It’s a complex statute that many are struggling to understand.
Recently, Bob Sims, community and economic development director, hosted a program that attempted to explain PPACA.  
Steve Wilson, senior vice president of business development of Benefit Insurance Marketing, in Lexington, was the guest speaker. Wilson, whose business serves 500 companies in Kentucky, shared his thoughts and data with attendees. Wilson’s goal was to help “break down the complexity” of the reform act.
Keeping healthcare affordable and sustainable is only a current dream as companies are now faced with the question of “Pay or Play” in 2014, Wilson said.
Some of the questions include:
Should they pay a penalty for choosing to opt out of providing insurance to their employees, forcing them to try and find coverage through state exchanges. Should they continue to offer health coverage to employees in 2014 and beyond, at higher rates?
“There are some good parts about the healthcare reforms and there are also some bad parts,” said Wilson. “The good side is that everyone will now have access to healthcare benefits; the bad side is what does it cost, and at whose expense.”
Everyone will be eligible for healthcare, regardless of race, sex, gender or medical history. However, if those who decide not to participate in a healthcare plan change their minds, it will directly interfere with the costs of care provided to others who are already involved in a healthcare plan.
For those employed, healthcare coverage availability will simply depend on the employer. Some employers may not participate in providing coverage, automatically leaving their employees with the only option of having to find “affordable” healthcare on their own.
Those who will receive insurance through their employers will be lucky due to the fact that the number of employees they have on staff will directly influence the cost of insurance. The more employees, the higher the costs. Employers therefore, may consider to not offer insurance at all depending on their numbers, or worse, could end up laying off or letting employees go to cut costs.
“It’s going to add a lot of paperwork and it’s going to cost employees a lot of money. It’s going to hit employees hard and employers have already been hit hard even though not all of the changes have gone into effect yet,” said Paul Lassanske, president of Southeast DME, a medical equipment supply company.
 “There’s a lot of hidden taxes in these changes, and people won’t realize how much it’s going to cost them,” Lassanske said. “I just received a letter the other day from our insurance provider stating that they would cover the research tax that we, as the employer, would have had to pay per employee.”
The research tax is only one of many other hidden taxes that will be thrown at employers, increasing their insurance costs.
Employers will be able to offer premium and cost-sharing subsidies to their employees. Cost-sharing subsidies will lower costs, but insurance may not be affordable to all. If employers have employees who opt out of the insurance they provide, receive insurance through a healthcare exchange, and receive a premium subsidy, the employer will be fined $3,000 per employee.
If employers who have 50 or more employees opt out of providing healthcare coverage they will be fined $2,000 per employee.
Another concern is that large corporation employers will simply opt out of providing healthcare coverage altogether, pay the fines that they owe and leave their employees “hanging dry.”
It is a legitimate concern that employees of larger industries will then leave their jobs, seeking employment at places that will have lower employee numbers, that will provide coverage regardless, or that they will seek insurance on their own, said Wilson.
Those left to find insurance on their own will be forced to pick up plans that may not financially match their income level. If workers leave their jobs due to the fact that their employer will not provide coverage or because they have been laid off, they may not have any income available to use to put towards paying for a healthcare plan.
“People have got to know that they have to have healthcare coverage in 2014 and that they will be fined if they are without it,” said Wilson.” Fines could range from $100 to $800 annually.
Lassanske said health insurance rates for his company had gone up 34 percent within the last year.
“We’re paying 75 percent of the costs, and yet there are some employees who cannot afford to pay the remaining 25 percent,” said Lassanske.
“These changes have already had a great impact on our business. We’re now employing more temporary help; in fact currently 40 percent of our workers are temporary help. When you figure costs to the company, it’s cheaper to go through a temp agency ....”
“This is the reason why you hear of so many people who do not like this act; they don’t like it because it’s going to cause employers to drop employees or coverage, and it’s going to cause employees who lose or do not have coverage to leave if it’s not provided,” said LaRue County Judge/executive Tommy Turner, one of the attendees.
For now, the only groups that are currently not under the reform radar, are those businesses that employ fewer than 50 workers and have part-time or seasonal workers.
The government is waiting a year on working with small group insurance policies, and Wilson doubts that the exchange will be ready this year.
“The rules keep changing and we won’t find out what situation we’re going to be in until after the changes all go into effect – it’s a heck of a way to run a boat,” said Lassanske.
Sims said businesses need to consider all factors before making any decisions in regards to the PPACA.
“If they’re offering insurance and many do then there’s a lot of decisions to make. I think many are going to do a “knee jerk” move and make quick decisions before considering all their options. I caution local businesses to consider the big picture –it’s larger than a business owner, employee, etc,” Sims said. “When these deadline dates draw nearer, that’s when we’re going to start getting calls about these changes.”
For more information, visit www.ppaca.com.
For more information on upcoming programs contact Bob Sims at bsims@Laruecounty.org or 270-765-9541.