Issues at Stake for Small Businesses

Over the last few months we have heard a lot of rumors about the affect that healthcare reform might have on small businesses. Some claim that the proposed legislation will have no effect on small groups, while others claim is will make it easier for small groups to afford coverage, while yet others claim that it will force small businesses to provide coverage that they cannot afford. The truth probably lies somewhere in between, but until the actual text of the bill is laid out we will have no way of knowing who is right. Unfortunately all that the Senate committees are releasing are gilded summaries of what is supposedly in the draft legislation rather than the actual wording.

Many experts contend that people may lose their employer sponsored coverage if a play-or-pay mandate system was enacted. The argument being that if given the choice between sponsoring expensive healthcare and paying a fine, many companies will just choose the fine. The truth of the matter is that while companies that do not currently offer benefits may choose to pay the fine rather than take on coverage, most groups that currently have coverage will see no reason to get rid of it just to pay an fine, whether it is less than the cost of a policy or not.

The real area that may come in to play for small business owners is the proposed tax on what lawmakers are calling “cadillac” health care plans. Basically, this means that if your plan has a richer schedule of benefits than the proposed national standard, you may pay a penalty tax. Until the actually wording of the bill is released we will not know what constitutes a cadillac plan and depending on the wording of the bill it is impossible to know how many small businesses will be affected by this penalty. Senate Democrats have marked up the section concerning the taxing of cadillac plans to allow employees in high risk fields such as mining to be exempt after heavy pressure from labor unions and lobbyist. Small business owner really do not have a powerful lobby to support them in Congress, so it is unlikely that they will be making exceptions for any small businesses.

Hopefully in the next few weeks the final wording of the bill will be presented, but by then it may be too late for any change.



Source

http://www.bloomberg.com/apps/news?pid=20670001&sid=ajWDP_UCYBoo

http://boss.blogs.nytimes.com/2009/09/30/will-health-care-reform-encourage-small-business-to-drop-health-coverage?htm