Thursday, September 19, 2019
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Editorial & Opinion

COMMENTARY: The Affordable Health Care Act may be the BEST thing that’s happened to small business owners in years

Category: Editorial & Opinion

By Lou Phelps, CEN Publisher

I have no crystal ball, and I’m just as confused as the rest of us trying to understand the full impact and implications of the implementation of the Affordable Health Care Act.

But, here’s something to think about if you’re a small business owner – 90% of the businesses in Coastal Georgia.

The Republican Party has stated for years that it is the champion of small business, and the Party leadership has generally fought the passing, implementing and now funding of the Affordable Health Care Act. 

But they may be in for a serious problem in continuing to make that claim in the future because “Obamacare” may be the best thing that has happened for small business owners in years.   

I’m a small business owner, and have been since 1981.  In the community news business – and now the digital news business – in both Boston and Georgia - I have always owned the smaller company than the metro daily or the TV, radio and billboard corporations with whom I have had to compete for both ad dollars, employees and freelancers.

Just when we would get a reporter trained well, or a sales rep functioning at a high level of productivity, the larger news corp would lure them away - usually because they could offer them better benefits including a better health insurance plan.  You’re happy for them, and proud of their new opportunity, but you start over once again, developing a good staff member to replace them.

The large media companies – and most larger corporations - have traditionally been able to offer better overall benefits than small business owners. And, they have been able to shoulder a larger portion of the costs for medical insurance for both individuals and family coverage. Even if a small company was able to offer health insurance, our rates to the individual were higher because of a smaller group, meaning less money in the employee’s pocket.

But the Affordable Health Care Act is changing all that. 

A $20,000 a year young reporter will now qualify for health insurance at extremely low monthly rates in Georgia by self-insuring in the new pool of insurers under the Affordable Health Care Act. In fact, the rates may be much lower for both an individual and or families who self-insure versus being part of a group plan at a large corporation where the costs for older employees and those staff members insuring a family of six are pooled.  The game may be changing.

Further, many small companies have survived the economic downturn by turning to permanent part-time employees and the use of freelance contractors.  When the Affordable Health Care Act goes live in a few months, those individuals can now purchase health insurance on their own, be able to live with improved medical care and stop putting off annual checkups and procedures they need while continuing to work for their exciting and innovative small company.

Remember that all businesses with fewer than 50 full time workers are exempt from the Affordable Health Care Act, which means that approximately 96 percent of all U.S. businesses are not even affected by the new law.

In Coastal Georgia, that’s probably 90% of the workforce.

Those with 50 or more full timers are required to offer insurance, and they’re allowed to pass along all or part of the cost of the premium—up to 9.5 percent of a covered worker's household income—to their employees. Lower-income workers may also qualify for tax credits or subsidies to help offset the cost of their corporate plan.

I have to guess that the 28-year-old employee who has traditionally felt they don’t need health care is most likely going to pay the $95 a year penalty to have no insurance.

Even in 2015, when the penalty increases to $325 (or 2 percent of income, whichever is greater), that’s only $6.00 a week fine versus getting on their company’s health insurance plan. 

In 2016, the penalty goes up to $695 a year or 2.5 percent of their income.  That means that all employees under up to $28,000 a year, will choose between a $58 a month penalty or paying for the company’s health plan. Aren’t most of our plans charging employees a lot more than $58 a month?

Remember that even if employees work for a company that offers health insurance, they can self-insure.  News this week is that rates are much lower than had been expected in Georgia because so many people projected to get into the pool.

I suspect many younger, creative and recently educated workers may NOT take the insurance offered by their large employer, and will in fact seek other options.  Therefore, the job with the ‘big corporation’ may not look as attractive.  And, I think that means that small business owners may benefit.


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