Healthcare Reform And Small Business
Yesterday the U.S. House of Representatives took a “historic” step in passing a major healthcare reform bill. Today President Obama signed it into law. This bill will affect everyone, even to the extent that almost everyone is required to have some sort of medical insurance (there are a few exceptions).
I run a cramped business and new bills like this make me concerned for the survival of exiguous businesses. Of course, this awe also creeps up when minimum wage is raised. But in terms of this healthcare bill, there are some specifics that small business owners need to pay attention to.
According to Kaiser Health Care’s FAQ, the reach of the reform bill is determined by the size of your small business. It says that if your business has fewer than 50 workers, then there will be no penalty for not offering insurance. However, “companies could get tax credits to help buy insurance if they have 25 or fewer employees and a workforce with an average wage of up to $50,000. Tax credits of up to 35 percent of the cost of premiums would be available this year and would reach 50 percent in 2014. The bulky credits are for the smallest firms with low-wage workers; the subsidies shrink as companies’ workforces and average wages rise.”
The FAQ also states that companies with more than 50 workers that do not offer insurance would have to pay a penalty of up to $2000 per full-time employee if any of them got a government subsidy through the government exchange program. The penalty, however, would not count for the first 30 employees. However, it looks like none of this will take effect until 2014, assuming it passing a Senate vote.
That’s a lot for a small business to handle.
Luckily, I am the only actual employee of my company, Signature Fitness Consulting, here in Baltimore, Maryland. However, I have been looking to employ a couple of my family members to help me out from time to time. As a company that focuses primarily on the education of health and wellness combined with some consume training, and having been around only since 2008, I haven’t made the financial strides to even think of hiring an employee. A person in my business situation would normally hire a contract or some sort of temporary worker for the time needed.
My position has always been that a company should pay their workers enough money to select insurance through the company, if they qualify, or be able to purchase it on their own somewhere else. And I’ve had more than my share of jobs where there was no insurance and I could not afford any. The only reason I really survived was that I receive my healthcare at a veteran’s facility here in Baltimore at no cost due to my service-connected disabilities. I do, however, need some kind of supplemental insurance to cover emergencies where I cannot accumulate to a VA facility.
I have plans to be able to keep my business running from home. And when it comes time for outside help, I will be looking for freelancers and independent contractors. People for which I can provide a 1099 for tax purposes.
Is that may plot of skirting the healthcare reform issue for small businesses? No. I just believe that if people want to be flexible in their work and that saves me money, then that sounds like a good idea — as long as the work is of good quality. Having said that, my previous rule still applies, to lift into account the need for the independent contractor to pay for his or her own insurance. I have to set my fees accordingly to account for such expenses, and I should pay contractors fairly so that they can do the same.
So, for right now, the healthcare reform bill will have no effect on me, except in the reevaluation of my fees to pay for my own insurance. I will look forward to day when my pre-existing conditions will no longer hold me back from getting insurance or for paying more money for it. Then I can be a bit more reasonable with my fees. Right now, this is about survival of my business.
And I will probably never procure to the point where I have more than 50 employees, because I do not want to be at that point, but I am glad there is some sort of relief for diminutive firms.
For now, I will let the dust choose on the bill and see if it passes the Senate before I start to panic over something that won’t be required for another four years. By then, I know that my business, and many other businesses will have attach policies in place to deal with healthcare requirements based on current size and anticipated growth.
Sources:
Kaiser Health Care Consumer’s Guide to Healthcare Reform
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Filed under Family Health Insurance Self Employed by on Jan 19th, 2012. 