Thursday, April 26, 2018
Business

Obamacare myths: Small-business owners' most common misconceptions about the law

New health insurance exchanges, one of the integral parts of the sweeping health care overhaul, are now up and running across the country. But many business owners are confused about what the exchanges offer and whether they have to sign up, according to recent polls, and some still have no idea what the law requires of their company and whether they will face fines or penalties for failing to comply.

Here, we address some of the most common misconceptions employers have about Obamacare.

Myth 1. Plans on the exchanges will be offered and operated by the government.

No, the exchanges, which are basically online shopping portals, will be run by either your state or the federal government (in Florida), but they will offer insurance plans run by private insurance companies. The marketplace for small-business owners to seek coverage for their employees will open Nov. 1.

Myth 2. Under Obamacare's employer mandate, every company must provide health care to employees.

No company is forced provide health coverage under the law. However, large employers (those with at least 50 workers) do face a steep tax penalty if they choose not to offer a plan that meets new affordability and minimum coverage requirements. It is that penalty that has become known as the "employer mandate" provision of the law.

Still, those employers are free to pay the extra taxes if they decide it works out better for their company.

More importantly, the law exempts companies with fewer than 50 employees, which represent 97 percent of U.S. businesses. So, nearly every employer in the country is exempt from penalties for not covering their workers.

Myth 3. The law's employer mandate requirements have been delayed until 2015.

Here is where it gets a bit technical. In July, Obama administration officials announced that they would not penalize large employers that do not provide adequate coverage to their employees during the first year (2014). However, the law still stands, and employers with 50 or more full-time workers are still supposed to offer plans that meet the new requirements; it is up to employers to choose whether to comply.

In other words, it isn't that the speed limit has been abolished, but rather, the cops have just announced they will not be writing tickets this year.

Myth 4. If employers want to offer coverage, they must do so through the exchanges.

Small-business owners (and individual consumers, for that matter) can still purchase coverage through a private broker or directly from an insurer, though they must ensure the plans meet new federal requirements. In nearly every state, the new exchanges simply offer an alternative to the existing market.

Myth 5. On the exchanges, all employers can now choose various plans to cover different workers.

Originally, this was supposed to be the case on all exchanges. Small-business owners were to be able to either pick one plan for their entire company or select a number of plans and give each employee a choice.

However, the Department of Health and Human Services announced this spring that it would delay that feature on the federal government's exchange, which is to be used by the majority of states. So, for the first year, most small employers using the exchanges must choose a single plan to cover all their workers.

Myth 6. Small businesses buying coverage on the exchanges will all get tax credits.

Indeed, federal tax breaks will be available on the exchanges to help employers pay for coverage, but only a fraction of firms eligible to use the small-business exchanges will be eligible for the subsidies.

During at least the first year (and possibly the second), the small-business exchanges will sell plans to firms with up to 50 employees, though the law requires all states to increase the cap to 100 workers by 2016.

However, the full tax credit, which jumps from 35 percent of a firm's health costs the past three years to 50 percent in 2014, is only for companies with 10 or fewer employees. Employers with up to 25 workers can get only a partial credit.

Myth 7. Employers face a $100-per-day fine for not telling employees about the new exchanges.

This one spooked a lot of employers when it first came to light last month. A little-known provision of the law requires all employers to provide a letter to workers notifying them of their options on the new insurance exchanges. Many reported that firms that did not comply would be slapped with a $100-per-day fine from the federal government.

Small Business Administration officials responded quickly, explaining that while employers are expected to inform their workforces about the new marketplaces, there is no penalty for failing to provide the notice.

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