While health care reform continues to be debated in Congress, preparations for its arrival have already begun for small businesses across the United States.
The extent to which small businesses will be impacted is still in flux, due to the absence of a final bill in Congress, but many of the more central tenants of the reform have already been aired.
Five reforms will impact small businesses more than any others in the bill as it stands:
- The Health Care Exchange: The health care exchange is meant to provide alternative insurance options for small businesses. Currently, small businesses are forced to buy from a very select group of plans to meet their workers’ needs. This market is anti-competitive and, by creating “insurance exchanges,” reform would create a broader market of options, according to White House reform proposals.
- The Small Business Tax Credit: Small businesses which provide health care would be incentivized to do so through government tax credits. According to current plans, smaller firms with lower average salaries would be given the largest credits to provide coverage. Under some of the current plans, businesses would receive $53 billion in tax credits to provide insurance over the years 2010 to 2019.
- Reduction in “Job Lock”: The ease of acquiring health insurance for small businesses after reform could end the effects of “job lock” and allow workers to move more freely from company to company. Rather than cling to their jobs worried that a small, entrepreneurial business would not offer health care many might be more willing to work for small start-ups in need of quality labour.
- Decrease in worker sick time: Quality insurance coverage could also have the impact of reducing sick time, a vital issue for firms with tiny payrolls and high reliance on each and every employee.
- How the size of your firm impacts your need to provide insurance: Right now, the most worrying thing for small businesses is where they fit in to the confusing mish-mash of legislation pouring out of the Congress. Specifics are vague. Many firms will not have to provide insurance because they are considered too small to carry the financial burden. Many others will be on the other side of that fence, worrying about whether or not tax credits will be able to pull them through in terms of spending on health insurance.
The reality of all these changes is that many firms will be looking over the legislation line-by-line for loopholes on how not to pay, or how to make their business more tax-efficient and receive more credits.
Until the final legislation is on President Obama’s desk, no one knows the full extent to which small businesses will be impacted — but it’s important to understand what parts could potentially affect you, as a small business owner, and prepare accordingly.
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