Independent Women's Forum: Meet Beth

ACA/Obamacare: The Rise of the Part-time Worker and the On Going Price Spike of Health Insurance Causing Increased Employee Deductibles, Co-Pays and Premium Payments

ACA/Obamacare: And About That Association You Joined to Obtain Health Insurance -Or- For Whom the Boot Tolls, It Tolls for Thee

Long standing insurance legislation requires that one can't create an association merely to buy insurance. But one can create an association for other reasons then offer ancillary benefits to one's members e.g. buying club membership, travel discounts, insurance, etc.

For example, James and Jane Goodfellow own the firm XYZ Builders with three employees. They join the local builders association that also offers health insurance as an ancillary benefit of membership. James and Jane purchase health insurance for themselves and their employees. Meanwhile, John Q. Carpenter, a sole proprietor, joins the local builders association as well. John purchases health insurance for himself through the association.

The local builders association, with many members, of which a portion purchase health insurance, is then a "group". Hence the group of associated people, with the main association for reasons other than buying insurance, comprise the group, consequently group insurance coverage.

Enter ACA/Obamacare:  

‘Businesses with fewer than 50 workers are exempt from the most stringent requirements for larger employers under the federal health-care law. But that doesn't mean they're off the hook entirely.

Smaller employers aren't required under the Affordable Care Act to offer coverage for their full-time workers—as larger firms must by 2016 or face penalties, for instance. But many owners of small ventures and startup entrepreneurs are nonetheless facing big changes to how they obtain their own health coverage, as well as to the benefits they're able to offer employees.

"It's a myth that smaller firms aren't being hit" by the health law, albeit in less obvious ways, says James Schutzer, president of the New York State Association of Health Underwriters, referring to employers with fewer than 50 workers.

Several thousand of the nation's smallest business owners—sole proprietors and the self-employed—were kicked off their small-business plans by carriers earlier this year. That is because new guidelines define "employers" as having at least two full-time employees, not including a spouse, in order to be eligible for group plans.

In all, more than 78% of the estimated 28 million small businesses in the U.S. have no employees, according to the Small Business Administration. These business owners must now seek coverage as individuals, or face fines.

Many consumers and small-business owners are finding affordable plans on the individual market, according to government health officials and insurance brokers. But at least some of the business owners who were excluded from group plans as a result of the health law are struggling with higher premiums, less robust benefits or uncertainty within a new, unfamiliar network, says Scott Lyon, vice president of the Small Business Association of Michigan.

In December, the association's own group plan, which currently has 4,000 small-business members and covers about 40,000 workers and their families, was forced to kick out 700 sole proprietors, he says.’ - Small Firms Hit by Big Changes in Health Coverage, WSJ, 08/06/2014

Link to the entire article appears below:

http://online.wsj.com/articles/kicked-off-group-health-plans-some-owners-face-a-tough-choice-1407367372

 

Obama Administration Estimates ACA to Accelerate Small Business Health Insurance Premiums: When Promised Premium Decreases Become Premium Increases

“Nearly two-thirds of small businesses that currently offer health insurance to their workers will pay more for coverage as a result of new rules in the health care law, as will millions of small-business employees and their family members, according to new estimates released by the Obama administration.

The Centers for Medicare and Medicaid Services, which has spearheaded the implementation of the law, has acknowledged that new rules requiring insurers to offer guaranteed coverage and renewal options to small employers will likely drive up the price of insurance for some companies. So will rules banning insurance companies from varying their rates based on factors like a company’s industry or the age of its employees.

On the other hand, some firms with exceptionally sick or at-risk workers will benefit from those provisions and see their premiums come down under the new rules, which took effect this year.

What we didn’t know was how many small businesses would see their rates rise and how many would see them fall. Now, it’s becoming clear.

“We are estimating that 65 percent of the small firms are expected to experience increases in their premium rates while the remaining 35 percent are anticipated to have rate reductions,” CMS’ Office of the Actuary wrote in a new report. Conversely, “the effect on large employers is expected to be negligible,” because most large companies run their health insurance programs in house.”

“If accurate, it would continue a steady climb in insurance costs for many small businesses. Ninety-six percent of small businesses say their premiums have increased in the past five years, with the average monthly insurance cost soaring from $590 per employee in 2009 to $1,121 in 2014, according to poll released earlier this month by the National Small Business Association.” - Obama administration: Health law’s new rules will increase costs for most small businesses, Washingtonpost.com, 02/24/2014

　

Link to the article appears below:

http://www.washingtonpost.com/business/on-small-business/obama-administration-health-laws-new-rules-will-increase-costs-for-most-small-businesses/2014/02/24/0623d01e-9d9c-11e3-9ba6-800d1192d08b_story.html
 

Gallup Poll: Obamacare Causing Small Businesses to Freeze Hiring

'Small business owners' fear of the effect of the new health-care reform law on their bottom line is prompting many to hold off on hiring and even to shed jobs in some cases, a recent poll found.

"We were startled because we know that employers were concerned about the Affordable Care Act and the effects it would have on their business, but we didn't realize the extent they were concerned, or that the businesses were being proactive to make sure the effects of the ACA actually were minimized," said attorney Steven Friedman of Littler Mendelson. His firm, which specializes in employment law, commissioned the Gallup poll.

"If the small businesses' fears are reasonable, then it could mean that the small business sector grows slower than what economic conditions otherwise would indicate. And small businesses have been a growth engine in the economy," Friedman told CNBC.

Forty-one percent of the businesses surveyed have frozen hiring because of the health-care law known as Obamacare. And almost one-fifth—19 percent— answered "yes" when asked if they had "reduced the number of employees you have in your business as a specific result of the Affordable Care Act."

The poll was taken by 603 owners whose businesses have under $20 million in annual sales.' - Will Obamacare Hurt Jobs? It's Already Happening, Poll Finds, CNBC 06/19/2013

Link to entire article appears below:

http://www.cnbc.com/id/100825782?__source=yahoonews&par=yahoonews

Obamacare: the rise of the 29’ers, 49’ers and the Death of Small Business Full-Timers

“From January 1, 2014, Obamacare requires firms with 50 or more ‘full-time-equivalent workers to offer health plans to employees who work more than 30 hours a week. Employers who cross the 50 employee threshold and fail to offer health insurance confront a $2,000 annual penalty for each uncovered worker beyond 30 employees. So, by hiring the 50th worker, the firm pays a penalty on the previous 19 workers as well.

As is too frequently the case when socialists legislate to control the private sector, enormously high perverse incentives are created. Thousands of small businesses will confront a $40,000 tax penalty should they expand and hire a 50th worker. A simple example illustrates the magnitude of the disincentive to expand.

　

Suppose that a firm with 49 employees hires a new worker for $12 per hour for 29 hours per week. There is no Obamacare health insurance requirement. Now suppose that that worker moves to 30 hours per week, becoming ‘full-time, under the Act. This triggers the full penalty. So, in order to obtain 52 hours of extra work from that worker, the extra cost rises from $12 per hour to %52 per hour. In terms of rational choice, what would you expect profit-seeking firms to do?

　

Well the answer is already there for all to see. Although Obamacare starts in 2014, the measurement period utilized by the Feds to determine a firm’s average number of full-time employees, began on January 1, 2013. And here is what is happening, most especially among fast-food restaurants that typically register annual profits of only between $50,000 to $100,000.

In a growing number of McDonalds and Burger King outlets, each such outlet hires employees to operate the cash register or to flip burgers for 20 hours per week. Those worker then head to the other outlet for another 20 hours per week. This exchange of employees avoids the Obamacare health insurance/tax. Many other such outlets are now known as the 49'ers because they cap their employees at 49. Businesses that hire young less-skilled workers put a ceiling on the work-week below 30 hours. These firms are known as the 29'ers.

　

Among the fast food franchises that now engage in such rational behavior are: McDonalds, Burger King, Red Lobster, KFC, Dunkin’ Donuts, Taco-Bell, Red Lobster and Olive Gardens. And they are just the trail-blazers among the small business sector.” - Charles Rowley, economist, George Mason University

Dr. Rowley’s blog post entitled Obamacare kills small-business full-time hires can be seen in its entirety at the following link:

http://charlesrowley.com/2013/02/23/obamacare-kills-small-business-full-time-hires/