WHAT HEALTH REFORM MEANS FOR SMALL BUSINESSES
The healthcare reform means that any employer that has greater than 50 employees must provide health insurance to its employees. Those employers that have less than 25 employees get a credit if they provide health insurance. If the employer has greater than 50 people and does not provide insurance, they will be fined.
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It is expected that some businesses will feel the impact, but it should not prove fatal for them. The key is for the businesses to plan ahead. Although not certain, the net effect of the healthcare law may keep more money in people’s pockets.
EMPLOYERS SHOULDN’T ATTEMPT TO DUCK THE NEW HEALTHCARE MANDATE
In the wake of the Supreme Court’s recent healthcare decision, several companies with 50 or more full-time employees have attempted to dodge the employer mandate requiring those employers that have greater than 50 or more employees to provide health insurance to their employees. Many of those companies are looking to break up their companies into two different corporations in order to sneak under the 50 company threshold. The problem is that this technique will not work. The government will still consider both companies as a single entity because the employer mandate penalty relies on “controlled group” provisions, focusing on who controls the company, not necessarily what the company does. This is specifically meant to prevent skirting around the law.
In addition, this could also affect married couples. Tax law generally assumes a person owns an interest in their spouse’s business. That means small business owners who are married to each other should take the steps necessary to insure the IRS, which will enforce the mandate, won’t combine their staff. It is still unclear how the IRS will enforce the rules of requiring health insurance or enforcing a penalty if it is not provided.
SIX REASONS HEALTHCARE COSTS KEEP GOING UP
Healthcare reform will help millions of Americans obtain insurance. Experts say that the Affordable Care Act itself won’t stop the cost of healthcare from continuing to rise and consumers from paying bigger bills. The monthly fees consumers pay to get coverage continue to grow at a rate much greater than overall inflation. There are many reasons that the costs are going up, but experts identify the six main factors:
- Hospital care – factors driving up hospital costs include the rising cost of goods and services for patient care, such as equipment and information systems, as well as a rising demand for care and compliance with regulatory requirements. An increasingly significant issue for hospitals is the increase in patients covered by Medicare and Medicaid, which now accounts for 60% of all admissions. Neither program fully reimburses the cost of hospital care. Hospitals are also seeing a jump in the cost of care for patients who can’t pay, which averages about 6% of hospital expenses.
- Doctor’s visits – according to the American Medical Association, the cost of physician’s care, both to insurers and patients, has risen 1.3% during the past year. Doctors who accept insurance have little wiggle room to recoup higher costs because they are locked into a negotiated fee with their insureds. At the same time, consumers are paying a bigger share of their medical bills than before because their insurers are shifting more payment burden onto the customers through higher co-payments, co-insurance and deductibles.
- Medical technology – medical technology, such as robotic surgery, is growing rapidly. These high cost procedures improve the quality of care, but they also push up costs for consumers. As a result, insurance claims for new high-tech procedures are typically higher.
- Lab tests – more and more consumers are using medical labs. This is driving up the overall cost of the testing. 51% of laboratory representatives expect an increase in demand in the next 3-5 years because of the aging population and push towards personalized medicine based on a patient’s genetic makeup.
- Drugs – Drug costs are still rising but at a slower pace. The increase is being mitigated by more expensive brand of drugs going off patent and the cheaper generic equivalents coming to market. However, generic equivalents do not immediately hit the market, so there is a lag time before prices adjust.
- Health Plan Administration – Insurers make annual changes to the prices of their plans to factor in their own cost of doing business. For example, insurers may set higher premiums and deductibles if the volume of insurance reimbursements they paid out the prior year was more than what they had anticipated.
Prepared by Katy M. Hedges