Healthcare s Impact On Hiring Decisions In 2014 and BeyondBy: Rachel Chapman, Owner Express Employment Professionals
For almost six years, healthcare has been one of the most highly debated topics among politicians, the news media, and the general public. Even after the Patient Protection and Affordable Healthcare Act (ACA) was signed by President Obama in 2010, the debate raged on as some people trumpeted its positives, some highlighted its negatives, and many felt uncertain of its real impact. Employers, especially those with small businesses, generally fell into the uncertain category as they waited to see the ACA s effects.
Now that we ve entered 2014 and seen many of the act s elements implemented, there s still a general feeling of confusion among small businesses that make up more than 99% of U.S. employers. However, one thing is clear, healthcare reform is impacting how small businesses think about and approach hiring. A study from the U.S. Chamber of Commerce and Harris Interactive found that 71% of the small business executives surveyed said the ACA would make them less likely to hire employees.
Staff Size Matters
The primary reason for this is that many parts of the healthcare law are tied to the number of employees a company has. The most common breakdowns, according to the U.S. Small Business Administration, are 1-24 employees, 25-49 employees, and 50+ employees. Of all the aspects of healthcare reform that are linked to staff size, small business owners need to be especially aware of two specific areas.
Employee Health Coverage
Employers who have 49 or fewer full-time employees are not required to offer health insurance. However, those who do want to offer their staff health coverage can do so through the Small Business Health Options Program (SHOP). Currently, the SHOP Marketplace is only available for businesses with 1-49 employees, but in 2016 it will be opened to companies with up to 100 employees.
Due to some program difficulties, the federally run SHOP exchange, which was slated to have already been opened, has been delayed a year. According to the Huffington Post, small businesses that planned to acquire their insurance through the marketplace can instead sign up through an insurance broker or health insurance company. And while small business employees were originally going to be able to choose from any plan available on the exchange, for 2014, the employer will have to select the coverage for everyone.
Beginning in 2014, there are two additional changes to employer-provided health coverage that were highlighted on Healthcare.gov s small business page. Insurance companies can no longer deny your business coverage due to the health status or pre-existing conditions of any of your employees or their dependents. They also cannot raise premiums for employees with higher-than-average medical costs or those who are women. These two new rules do not apply, however, to grandfathered plans.
Healthcare Tax Credit
Employers who fall below the 25-employee mark, with employees making an average of ,000 a year or less, and provide health insurance to their staff, may be eligible for a small business healthcare tax credit. Beginning this year, small businesses could be reimbursed for as much as 50% of their contributions toward employee premiums. The health coverage must be through the SHOP Marketplace, but there are salary restrictions. Because of the delay of the SHOP exchange, businesses that want to apply for the credit can submit their application when they file their taxes for 2014.
As small business owners plan for the future and create a strategy to grow their businesses, employee-count is a key factor to consider. And, due to increasing connections between healthcare coverage requirements and company size, this factor will require even more scrutiny this year and in the years to come. Whether businesses will choose to slow their growth, accept more health coverage responsibilities, or utilize temporary/contract workers who aren t factored into their employee counts remain to be seen.