What Ann Arbor area small businesses need to know about federal health care reform
(Editor's note: This story was written by Rebecca Woodward, marketing manager of the Ann Arbor / Ypsilanti Regional Chamber of Commerce.)
As an advocate for local businesses on public policy issues, the Ann Arbor / Ypsilanti Regional Chamber recently partnered with Michigan Consumers for Healthcare and the Small Business Majority to offer an informational session on the Affordable Care Act (ACA) and its impact on small businesses. On March 1, representatives from the Small Business Majority met with local business owners at the Chamber to discuss the implications of the ACA as it is enacted over the next several years.
The ACA is intended to give small businesses and individuals access to a broader range of health care plans, contain rising health care costs and provide tax credits for employee health care premiums paid by small employers.
Smaller profit margins mean small employers are less able to absorb increases in health care premiums, leaving their employees especially vulnerable to rising health care costs. The Employee Benefit Research Institute estimates that approximately 50 percent of uninsured Americans are small business owners, employees or their dependents.
Insurance Exchanges
The ACA builds upon the existing employer-based health insurance system by introducing State Insurance Exchanges that will allow small businesses and individuals to join together for increased negotiating power and access to expanded plan options.
Although the U.S. Supreme Court is currently considering whether to uphold the law and could strike it down, small businesses must still prepare for the law's implications so that they're not caught off guard.
By 2014, every state must have its own Small Business Health Options program or “SHOP exchange,” or one set up by the U.S. Department of Health and Human services. Legislation is currently pending in Michigan for a state-established exchange. Businesses with 1 to 100 employees will qualify for participation in the SHOP Exchange small group market. Exchanges will offer four categories of insurance packages based on the percentage of cost each plan will cover:
--Bronze = 60% --Silver = 70% --Gold = 80% --Platinum = 90%
Each level will include a minimum benefit requirement for plans offered. Employers may choose what level of coverage to offer, allowing employees to choose any plan within the exchange at that level. The Department of Health & Human Services has launched www.HealthCare.gov to offer information about coverage options available in each state.
Cost Containment
Under the Affordable Care Act, small businesses will see decreasing premium costs. The ACA requires that 80% of the premium for small group and individual plans be spent on care, rather than administrative expenses, limiting administrative overhead. The ACA also imposes limits on cost-sharing within plans at each coverage level, including a $2000 limit on deductibles for individuals ($4000 for families), and eliminates cost-sharing on preventive services and caps on the dollar value of services.
The ACA also promotes prevention and wellness programs to reduce the likelihood of preventable health conditions requiring costly treatment later in life. Grants will be made available through the Department of Health and Human Services for small employers that introduce evidence-based workplace wellness programs, such as healthier on-site food options or flextime to allow employees to be more physically active.
Tax Credits
Businesses with fewer than 25 employees, average wages below $50,000 and which pay at least 50% of the premium cost will also be eligible for tax credit that will save an average of $1000 per employee. In 2010, approximately 1.2 million businesses were eligible for the maximum credit. To calculate your credit, the Small Business Majority offers an online credit calculator.
Shared Responsibility Requirement
On Jan. 1, 2014, the shared responsibility provision will take effect, requiring some employers to pay a penalty per each full-time employee for whom the employer’s coverage is unaffordable, who receives government assistance and buys coverage in an exchange.
However, most small businesses will be exempt from a penalty if they don’t offer health insurance and those with fewer than 50 full-time employees are not subject to the provision. Businesses with 50 or more employees but no employee who receives an individual premium tax credit or cost-sharing reductions (both based on income) will not be required to pay a penalty, regardless of whether they provide insurance.
If an employer does offer coverage, and at least one full-time employee receives a premium tax credit or cost-sharing reductions, the employer will be required to pay $3,000 for each employee who receives assistance or $2,000 per full-time employee (not counting the first 30 employees), whichever is less.
For more information about how the payment is calculated, visit the Small Business Majority’s Health Coverage Guide.
The A2Y Chamber regularly hosts informational events on community issues. Next up is a Community Conversation on Michigan’s pre-K-12 Education System from 6-8 p.m. March 28 at Sandler Training in Ann Arbor. See more information here.
Comments
Chase Ingersoll
Tue, Apr 10, 2012 : 12:55 p.m.
BTW: I could support "universal health care" if it was military style where everyone citizen and their family is considered part of a local guard or militia, shows up once a month for weapons training and community service projects and has no "medical record" privacy. Further, there would be no special status for Congressman or union members - no, they would get into the same line and take the same vaccinations that we all received as did our officers in the military. Absent such realistic solutions, the rest of this is just politicking to build a dependent constituency. Chase Ingersoll
Chase Ingersoll
Tue, Apr 10, 2012 : 12:49 p.m.
Rebecca: Have you actually read the bill (all of it), or are you simply regurgitating information provided to you and if so, don't you think that you should credit the specific source? And I have to ask - was it Andrew LaBarre the Chambers VP for governmental relations and candidate for County Board, and former John Dingell aide who channeled this information to you? Also - I can't see in your Linked In, bio what qualifies you for any particular expertise in health care or small business (Eastern Echo, Art Museum, Hotel Chain, and Chamber of Commerce). At least you and Ann Arbor.com could respect it's readers enough to perhaps offer someone in the medical field who owns a small business (like Dr Rob Steele) to draft a commentary on this subject. As a dues paying member of the Ann Arbor Chamber of Commerce, I think I need to be at the next board meeting to ask some questions and I would suggest that any readers here who qualify as such, do the same. Chase Ingersoll
Rebecca Woodward
Wed, Apr 18, 2012 : 3:47 p.m.
Hi Chase, To clarify, this article is based on information presented by Michigan Consumers for Healthcare and the Small Business Majority at the informational session organized by the Chamber. More extensive information is available on the Small Business Majority's Web site, which is linked to in the article. Please feel free to contact Andy LaBarre at 734-214-0101 if you have concerns about any issues considered by the Chamber's Public Policy committee. Thanks, Rebecca
clownfish
Wed, Mar 28, 2012 : 12:45 p.m.
Thank you for posting actual fact based information.
Veracity
Wed, Mar 28, 2012 : 3:40 a.m.
The only way to provide truly universal health care and bring down the costs is to have a national health care system modeled after the Veterans Administration Health Care System. Having been a physician in the VA for twenty-eight years I can assure you that: - the VA allows veterans to choose their own physicians who will provide continuity of care - the VA provides veterans with quality of care equal to and in many cases better than is provided in private and public non-VA medical facilities - the VA provides top quality medical care for a cost of up to two-thirds less than cost of similar non-VA medical care; and, with many healthy civilian clients added to the present veteran population receiving care through the VAHCS, the costs will be even lower - the VA's tort tribunal handling of medical liability claims eliminates nuisance suits and assures reasonable and justifiable claims settlements - the VA's government pay schedules eliminates pay by number of clients treated or tests ordered - the VA monitors care given and audits professional activities (medical, surgical, radiology, laboratory, etc) to assure high quality of care and as a result of all these measures, eighty-five percent of VA clientele have consistently rated their satisfaction as good or excellent.
Veracity
Wed, Apr 4, 2012 : 6:39 p.m.
BobbyJohn: First, VA is not insurance. It is service provided free to veterans except for a nominal co-pay for medications. By serving their country veterans receive the privilege of access to Veterans' Administration medical facilities across the country. The cost of VA health care is covered by everyone's income tax and Congress sets to budgets for the Veterans Health Service. Your friends who use VA medical facilities but are not happy with their care should be proactive. They can request that their care be transferred to other physicians or can discuss specific care issues with ombudsmen at each facility. The VA monitors the sentiments of its users and is sensitive about providing care that satisfies the clientele. As a retired VA physician I know that most of my patients ended each visit with me with a smile and a sincere "thank you" which I found invaluable and personally rewarding.
BobbyJohn
Wed, Mar 28, 2012 : 4:30 p.m.
Appreciate your views and info, however, People I know who have insurance with the VA are not as happy with their care as they are outside the VA system. They like the extremely minimal cost, but are not especially satisfied with the care. Not enough individual attention.
Mick52
Tue, Mar 27, 2012 : 9:04 p.m.
I am not sure if I have the facts correct, but I heard recently that a restaurant chain in AZ changed the status of their employees to temporary, cutting their hours to avoid paying for health care. A loophole I guess. Someone I know there has to find another job now because of the cut in hours and pay. I suppose that is one way to avoid HC for business.
jcj
Tue, Mar 27, 2012 : 7:48 p.m.
This article is ill timed! It should have been published a month ago or AFTER the Supreme Court rules!
tim
Tue, Mar 27, 2012 : 5:46 p.m.
Would it be cheaper to have employees get their own insurance and then just pay the penalty? If you had a bunch of employees making between 35--45,000 a year they could probably get better insurance on their own at a cheaper price. My prediction is that many businesses will dump insurance all together.
Veracity
Wed, Apr 4, 2012 : 6:25 p.m.
Those that drop health insurance are playing at Russian roulette. Almost any illness or injury that requires treatment in an emergency room or admission to a hospital is going to cost tens of thousands of dollars. The hospital administration will come after you legally to pay for your medical treatment. If you have insufficient money set aside to pay for your medical bills then you will be forced into bankruptcy with all its attended consequences. Meanwhile, all responsible adults who purchase health insurance will pay more because your inability to pay for your medical care is "built into or billed into" my health care premiums. This is necessary because medical facilities can not financially absorb all the costs for non-paying clients that they treat. I am sure that you can understand and appreciate this situation. Most people do not reason beyond their own financial situation and do not consider the impact that non-paying patients have on the global health care system.
tim
Wed, Mar 28, 2012 : 1:48 p.m.
Carrie and clown fish, so if an employer takes 300$ a month from the employee to help cover insurance costs, that comes to 3600$ a year. It would seem that it would cheaper ( if it a 30,000$ a year job) for the employee to have his/her own insurance and have the government subsidize the 3,600$. I'm not against it but I can see in some cases where it would be better for both employee and employer to drop insurance.
clownfish
Wed, Mar 28, 2012 : 12:44 p.m.
Individual policies tend to be more expensive than group policies.
Carrie Rheingans
Tue, Mar 27, 2012 : 6:44 p.m.
Each company will need to do its own math - companies will be fined ($2000 or $3000 per employee, see above) if they just dump insurance for their employees based on certain restrictions. It might be cheaper for the companies to pay for the insurance costs of employees than pay the fines, depending on each company's specific circumstances.
Technojunkie
Tue, Mar 27, 2012 : 5:03 p.m.
Maybe someday people will start asking questions about why everyone keeps getting so sick that they need so much atrociously expensive health care. It's like there's a conspiracy to make people sick and dependent on Big Brother. Too bad Obamacare has made high deductible insurance policies illegal. Fraction of the cost of full coverage, no asking bureaucrats for permission for routine expenses, etc. I suspect that the "no asking bureaucrats for permission" part is why the regime killed them.
ChrisW
Tue, Mar 27, 2012 : 4:37 p.m.
Prices will keep going up. Anyone that thinks that healthcare spending will decrease doesn't know a thing about how easily the healthcare industry can create demand and how ridiculous government mandates like e-records will increase costs and drive formerly independent doctors into money-sucking medical conglomerates. Thanks for the article, though. As a small business owner I'm hoping that I'm wrong because insurance is our single largest cost outside of salaries.
Veracity
Wed, Apr 4, 2012 : 6:14 p.m.
A single payer health care program is your only hope for reducing your healthcare costs as well as those of your employees. If everyone received medical care through a VA medical type facility, as our veterans do, then you would have no healthcare costs to pay. Of course you will be taxed for the operation of the expanded VA health care system but the personal cost to you will be less than the premiums you pay now and will not expand at 6 to 8% or higher every year. (And, shhh!, no or nominal co-pays!). I know because I was a VA physician for 28 years.
CB
Tue, Mar 27, 2012 : 4:23 p.m.
Good. When everyone has insurance, maybe it won't cost me $75 for a 2-second pneumonia shot. Also, maybe ignorant people who don't realize that we ARE ALREADY paying the bill for indigent patients who don't pay their hospital bills will shut up. And, I don't appreciate having to pay health insurance for state employees who can cover their spouses while the spouses' employers get off scott free.