Rising Healthcare Costs for Small Business

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Rising Healthcare Costs for Small Business

Healthcare insurance has always been one of the essential employee benefits offered by an employer. Most employed people do receive health insurance through their employers. However, the costs of providing health insurance to employees are rising manifold for the employers – more so, for the small business owners.

Health Care Laws and Health Insurance

The costs and benefits of health insurance plans are dictated by the health care laws implemented by the government. We saw the introduction of Affordable Care Act, popularly called Obamacare, a few years back. In spite of initial negativism, the law revolutionized American healthcare insurance and the way healthcare was provided. Thousands of people were able to come under the ambit of health insurance and were hugely benefitted. Especially people who are in the low-income category were able to afford health insurance which was not possible previously. The health exchange marketplace made health insurance shopping more convenient.

Just when people got used to the Affordable Care Act, there are talks of the law being repealed and the introduction of a new healthcare law by the present government. This has led to skepticism and insecurity regarding healthcare insurance.

Healthcare Insurance and Small Businesses

In a bid to make health insurance reach the maximum number of people, the Affordable Care Act made it compulsory for businesses with more than 50 full-time or equivalent employees, to provide health insurance to its employees. Non-compliance with this mandate would result in a tax penalty for the businesses. While this works for the advantage of the employees, it has resulted in a substantial increase in health care costs for small business owners. The proportion of the expenses dedicated to health insurance is quite large and that is a cause of concern for them.

So, the ACA has pushed up the health insurance costs for small businesses on an average. Some companies who make health insurance benefits a priority understand that the amount that they pay for the premiums falls short of the actual medical expenses made by the employee. They give added health insurance benefits to reduce the burden on employees, but that, in turn, increases their costs ever higher. Some businesses counter this by keeping less than 50 full-time equivalent employees in which case they not required to pay tax penalty even if they do not offer health insurance benefits to employees.

Since small business are already reeling under the high health care insurance costs, the introduction of the new law, the American Health Care Law, might add to that. Small business owners would certainly like to get some respite from the burden of healthcare insurance expenses.