Obamacare has brought a lot of change to small business owners, and many can expect more of that in 2016. Since the Affordable Care Act was enacted three years ago, there have been several changes to the law, requiring small business owners to stay nimble when it comes to remaining compliant.
For the new year, more small business owners will have to offer coverage, while all small- and medium-sized enterprises will see an uptick in the paperwork required to stay in compliance. The cost to insure will also be on the rise in certain areas, all of which spells bad news for small business owners already struggling to navigate an ever-changing Obamacare.
“Small businesses should expect the unexpected,” says Barry Sloane, president and chief executive of Newtek Business Services Inc. of New York. “Plan as best as you can, because the act is constantly changing.”
More SMBs Have to Offer Coverage
According to small business experts, one of the big changes for 2016 is more smaller companies will be required to to offer employees health care insurance under the employer mandate portion of Obamacare. For this year, businesses that have 50 to 99 full-time equivalent employees have to provide health insurance to at least 95 percent of their full-time employees and dependents up to age 26, or pay a fine. Previously, small businesses were excluded from the rule. “This change hurts the businesses that were 50 to 99,” Sloane says. “More small businesses are going to have to offer the coverage.” Businesses with more than 50 full-time employees will be hit with a fine of up to $2,000 per employee if they don’t offer coverage.
While many small businesses were aware the change was coming, those who weren’t planning for it are going to get hit with a lot of new compliance requirements. “The Affordable Care Act was written by lawyers and has enormous complexity and lacks transparency,” says Eric Groves, Chief Executive of Alignable, the marketplace to connect small businesses and consumers. “It’s difficult to understand, so small business owners are worried about compliance.”
Under the employer mandate for 2016, small business owners have to offer health insurance for employees considered full time, but what constitutes full time can be confusing to business owners. That’s because in order to be considered full time, the worker has to average at least 30 hours a week in a month or work 130 hours in one calendar month. That means a small business owner has to calculate hours just to figure out if the company has to offer insurance. And that doesn’t even touch upon all the documentation and notifications required to stay compliant with the Affordable Care Act. Some of the regulations include required reporting about the health insurance marketplace to employees, a 90-day maximum waiting period to offer new employees health insurance and providing employees with a “Summary of Benefits and Coverage” form. Not to mention reporting back to the government on health coverage of employees.
Compliance Requirements Could Increase Audits
But staying compliant in terms of informing and reporting about health care coverage isn’t only going to be a headache. Do it wrong, and the business could face a time-consuming and costly audit. “Employers are seeing more audits because they are not disclosing appropriately or maintaining documentation,” says Steve Jackson, senior vice president of strategic development and channel sales at PrimePay, the West Chester, Pennsylvania, payroll services company. “We’ve seen a 300 percent increase year-over-year in the number of Department of Labor audits, and we fully expect to see an increase in audits into 2016.” Unlike large companies, small businesses don’t have a company attorney making sure everything is done right or a human resources department staying on top of all the paperwork, he notes.
Less Choice, Higher Premiums to Rule the Day
In addition to increased complexity because more small businesses will have to offer health insurance, business owners should expect to see a rise in premiums this year. One of the biggest gripes with Obamacare, at least from the perspective of small businesses, is the increase in premiums they have had to pay under ACA. According to Jackson, premiums increased around 20 percent in 2014 when Obamacare went into effect, and in 2016 there should be another increase of 5 to 8 percent in premiums. While that is not as drastic, it still means small businesses will have to shell out more money for health care in 2016. “Small business have to figure out who is going to cover this increase,” Jackson says. “Will the employer continue to cover it, or will more cost be shifted to the employee?”
Although the premium increase will vary from one area to the next, there are some states around the country that are seeing insurers exit the health exchange marketplace, limiting choice and, as a result, boosting premiums. Sloane pointed to New York as one example. Health Republic Insurance of New York, a major Obamacare insurance carrier, went out of business this past fall, reducing the number of insurance providers servicing the small business market. Sloane said other insurance providers in different markets may stop participating in Obamacare if they are even able to survive. “Small businesses should expect less choice, rising premiums and fewer networks,” Sloane says. “Health Republic Insurance of New York is the first of many carriers that aren’t going to be able to afford to provide the coverage.”
More from U.S. News
How to Pick a Health Insurance Plan
Osteoarthritis and Activity: Walking It Out
8 Cool Uses for 3-D Printers in Health Care
ACA Changes: More Small Business Owners to Offer Coverage, Face Increased Compliance originally appeared on usnews.com