How Have Small Businesses Been Impacted by the Affordable Care Act?

Back in March of 2010, when Obama was president, the Affordable Care Act came into play. This act is also known as the ACA, PPACA and Obamacare. There are a few different goals of this program. Essentially, the goal is to make health insurance affordable to more people than ever in the United States. Consumers receive subsidies, or premium tax credits, that will provide lower rates for households with lower income levels. The Medicaid program was also expanded to include more people and innovative medical care was designed to lower the costs of healthcare in general. For many people, the Affordable Care Act has been a great opportunity for them and their family, that they never had before. This healthcare program has had effects on many aspects of the country, including small businesses and other startup companies. Let’s take a look at how some of these small businesses have been affected by the ACA.

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Insurance Provision

Before the Affordable Care Act, there were small businesses that didn’t offer health insurance to their employees. The thought process behind this was the company was just starting out or it was very small and only employed a couple of people. Anybody taking a job on with these companies knew the situation and were not in need of insurance or were accepting of the lack of insurance. Now, these companies are penalized for not providing insurance. This penalty can make or break a company which is forcing them to provide an insurance option, even if it is very basic. This is having a negative impact financially as well. There are a few details to this program. If your company has less than fifty employees, you are exempt from insurance provision. If your company has over fifty employees but under 100, then you have one year to avoid insurance but will need to put a plan into place for the future. If you don’t fall into an exemption, you will be faced with the penalty that increases each year.

Cost Of Insurance

While companies are required to provide health insurance options in many instances, this insurance is not any more affordable because of the ACA. In fact, insurance rates are going up in the majority of instances. People used to be rated based on their geographical location, health conditions (whether or not they smoke), etc. A very small percentage of people saw rates decrease if they previously were put into the ‘poor health bracket’. For everyone else, rates are higher than ever. For small businesses, these costs can be overwhelming. This is because of now covering pre-existing health conditions. Children can be covered up to the age of 26 now. No copays are being collected and there is no co-insurance. These costs are hurting small businesses and self-employed individuals.

As a concept, the ACA sounded like a great idea. People who previously had trouble securing health insurance because of such high costs were going to be able to seek coverage. Unfortunately, the way the ACA was designed, it had a very negative effect on businesses. With new leadership, changes are being made to improve healthcare but also to prevent small businesses from going under or being limited to the amount of staff they can hire.

For more about the Affordable Care Act, see healthcare.gov.

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