Healthcare Reform: Some Opportunities?

Last week we started our discussion with the question, "what do the new healthcare reform regulations mean to me as a business owner, non-profit, or entrepreneur?" We also concluded one thing is certain: small business owners will need careful planning to successfully navigate the opportunities and challenges presented by health reform.

Cathedral assists business owners and non-profits in outcompeting bigger firms that may not be able manage challenges in healthcare reform. So let’s address some of the good news we know about the upcoming healthcare regulations:

• As a small business, you don't need to worry about scrambling to provide health insure this year. Companies with 50 or more employees that do not provide who do not provide health insurance won't have to pay penalties to the Internal Revenue Service until 2014.
• Nothing is changing fast - most of the provisions of the $940 billion legislation won't kick in until 2014. By 2014, states must set up Small Business Health Options Programs - "SHOP Exchanges" - essentially purchasing pools where small businesses join together to buy insurance./li>
  • What's defined as a "small business"? Those with no more than 100 employees, though states can limit the pools to companies with 50 or fewer employees through 2016. Companies that outgrow the size limit will be grandfathered in.
• The pools may slightly shrink your insurance costs: The Congressional Budget Office (CBO) predicts small-group premiums will fall by 1 to 4 percent based on these exchanges. (Unfortunately, the premiums may rise considerably before they fall. Health care insurance consultant Robert Laszewski told the Wall Street Journal that plans will want to make as much money as possible before the wide-sweeping reforms take effect in 2014.)
• The pools may slightly shrink your insurance costs: The Congressional Budget Office (CBO) predicts small-group premiums will fall by 1 to 4 percent based on these exchanges. (Unfortunately, the premiums may rise considerably before they fall. Health care insurance consultant Robert Laszewski told the Wall Street Journal that plans will want to make as much money as possible before the wide-sweeping reforms take effect in 2014.)
• Companies with fewer than 50 workers won't face penalties if they don't offer insurance.
• If you have 25 or fewer employees and a work force with an average pay of up to $40,000, you can get tax credits to help buy insurance: up to 35 percent of the cost of the premiums this year, rising to 50 percent in 2014. (You'll have to pay at least half of the total premium cost or 50 percent of a benchmark premium to qualify.)

With all this said, the new rules will impose fees on businesses with more than 50 employees if their workers receive government subsidies to buy insurance in lieu of employer-provided coverage.

We've started with a look at some opportunities the reform presents keeping in mind the resourcefulness of our small business community. Companies already pass on the rising costs of healthcare to their employees; there's no reason to expect that will change if they can't manage costs some other way. There's also an outside chance that the new insurance exchanges will make life easier for small businesses, as intended, by giving their workers a way to buy coverage at rates comparable to what big companies are able to negotiate.

In our ongoing health reform blog series we will continue to highlight financial, market, and business model options to successfully navigate the opportunities and challenges presented by health reform.

We look forward to your thoughts in this discussion.