A big worry for small businesses that were against the Obama administration’s healthcare law was that it would increase their costs. But now that the Supreme Court has upheld it, some small companies could opt to go a route that will save them thousands of dollars each year.
Under the law, companies with more than 50 workers must provide health insurance that the law defines as affordable, or pay a penalty. Paying the penalty may be cheaper and some business owners vow to consider doing just that.
“I have to consider not paying” for health insurance, says Nick Balletta, owner of TalkPoint, a New York firm that runs online broadcasts for businesses. Balletta has just under 100 employees, and he says he’s paying $8,000 a year for each employee’s insurance and $16,000 for family coverage.
“I have a fiduciary responsibility to shareholders to have that discussion.” The penalties are set according to a complicated formula and start at $2,000 per worker, with the first 30 workers excluded from the calculation. “This is a huge savings for us,” he says.
In the aftermath of the ruling, the possibilities for small companies may be as varied as the different kinds of business that operate across America. These employers will be forced to decide whether to pay for coverage, accept penalties or find ways to avoid the law. But with key issues like what the plans will cost still undecided, owners still have a long list of questions.
Willan Johnson, who owns VivoPools, a pool cleaning service in California, Nevada, Arizona and Florida, says the Supreme Court ruling gave him some closure. He had put off buying insurance until the ruling came down. But there is more waiting in his future. Now he’s going to wait to see how the law is implemented.
“We would love to do something sooner, but we have to be realistic and figure out what we can do given the economy and the state of overall business. We need to better understand what the alternatives are,” Johnson said.
Scott Spector has 71 employees at his architecture firm in New York. He believes that the law “is probably going to affect our business at the end of the day with increased premiums. How much, I don’t know.”
But the owner of Spector Group says, “I wouldn’t dream of passing the costs along to our clients. We’re going to absorb it and deal with it.”
Health law experts say that business owners may be pleasantly surprised to find that more insurance alternatives will be available – especially because the law provides for the creation of exchanges to sell insurance to companies and individuals.
“The health industry and the insurance industry and business in general will evolve to comply with this law,” said Alden Bianchi, a healthcare attorney with Mintz Levin, a law firm in Boston.
If a company decides it wants to try to find ways to avoid the law, it could try to keep its workforce below 50, split its businesses into different companies, none with more than 50 workers, or move operations overseas.
Right now, Hubworks Interactive, a Coeur d’Alene, Idaho, software company doesn’t have enough workers to be bound by the law. It expects to have more than 50 employees in the next year or two, and that would require it to provide insurance for its workers. Co-founder Sam Winter has no plans to try to avoid the law. The company currently provides health insurance for its 18 employees and their families.
“No doubt we’ll want to join in the state’s health exchange program” to try to get the best deal, Winter says, “We want to provide healthcare, we want to do the right thing.”
But he says, “we are in a waiting game,” watching to see what rates will be like.
“If rates jump 30 percent, it’s going to have a huge impact on whether we’ll be able to keeping hiring and cover families.”