Confusion about the health law reigns for many small businesses
By Kelley Weiss, CHCF Center for Health Reporting
With less than a year to go before the full rollout of Obamacare, many business owners are still scratching their heads over what it will mean for them.
In fact, most still wrongly believe they’ll have to offer health insurance to their employees, according to a recent eHealth survey. While businesses with 50 or more full time employees will have to pay a $2,000 penalty per worker if they do not offer health insurance, there is no penalty for smaller businesses.
Another commonly misunderstood part of the health care law is the role of the tax code. John Gonzales [also with the Center for Health Reporting] has more details about how paying your taxes and Obamacare works. It’s the bedrock of enforcing the law and subsidizing premiums for people to buy insurance.
At an event about taxes and Obamacare, UCLA health care economist Dylan Roby gave a somewhat grim picture. He says widespread ignorance and varying degrees of hostility towards the health care law persist among business owners.
“Many of these employers, especially on the smaller level, are not that great about maintaining a relationship with the government,” Roby says.
Take, for example, the small business tax credits that have been available since 2010, when Obamacare passed. The U.S. Government Accountability Office last year estimated that less than 5 percent of eligible businesses have claimed the credit. This isn’t a big surprise to Larry Levitt of the Kaiser Family Foundation.
“It’s about as exciting as picking health insurance and doing your taxes and that’s what we’re combining here,” Levitt says.
These business owners are potentially leaving money on the table. If you're a small business owner who has been offering health insurance at any point since 2010, you may qualify for a tax credit. You can file a revised tax return to collect it.
Another break for businesses trying to purchase health insurance for their workers could come from the new “marketplace” called Covered California.
This state-run exchange is supposed to even the playing field for small businesses that can pay almost 20 percent more than larger ones for health insurance. Currently a little under half of California’s small businesses offer health insurance to their employees.
On the flip side, those $2,000-per-employee penalties for large businesses that don’t offer health insurance start next year. But this will affect less than 5 percent of businesses. That’s because in California, and nationally, most businesses are considered small, meaning they have fewer than 50 employees.
Allan Zaremberg, head of the California Chamber of Commerce, says it’s a daunting task for businesses to keep the carrot and stick aspects of Obamacare straight.
“There is a heck of a lot of confusion about tax credits and costs and do I put him in the exchange or take the penalties,” Zaremberg says.
Allan says he’s not convinced the stick approach will work with businesses. He says they’ll be weighing if taking a couple thousand-dollar penalty per employee for not offering coverage would actually be cheaper.
“I’m not always sure that you can scare them with a monetary penalty. And certainly for a small employer there is none,” Zaremberg says.
Now the push is on to educate businesses about the potential benefits of Obamacare. USA Today and Kaiser Health News report that California has budgeted about $250 million to help consumers, including small businesses. But few experts are saying it’ll be easy.