Grace Jaen, the director of G&A Beneficial, says small businesses need to be aware of the changes that are happening next year.
Many of the Affordable Care Act’s mandates will take effect on Jan. 1, forcing businesses to take a second look at how they handle their employees’ health benefits.
For big corporations with human resource departments and legal experts who’ve examined the bill cover to cover, this won’t be much of a problem. But many businesses leave most of the HR work to the owner or a general manager, which may cause businesses to become non-compliant if the new mandates aren’t followed.
Here are three quick parts of Obamacare that businesses with less than 50 employees should be aware of:
How will my health insurance rates change?
Small employers will see changes in the way their plans are formed, said Grace Jaen, director of G&A Beneficial. Rather than basing rates off of how healthy a group is, the government will now use community rates, ages of employees and tobacco use as common factors to determine the cost of a health care plan.
Should I take take the penalty or pay for employee coverage?
This is the million-dollar question for a lot of employers that are looking at Obamacare. Employers with more than 50 employees may not offer insurance and pay the penalty since it may be less expensive overall. However Jaen points out that just because it helps the bottom line doesn’t mean it’s best for the company.
“Companies that have had benefits in the past have not been required to provide benefits. They’ve provided benefits because they want to recruit and retain employees,” Jaen said. “If they do drop their group program, they’re going to have to pay a penalty and they’re going to lose potential talent.”
**What are age-banded rates? **
These change the traditional employee-only rates that were standard for every employee to rates that depend on the employee’s age. So, even on a group-offered health care plan, an employee who is 55 could cost more than an employee who is 35, said Jaen. However, under the new regulations, an insurance provider cannot charge more than three times for an older employee as it does a younger one.
One reason the federal government may have switched to this model is to be more competitive with individual health care, Jaen said.
This article was written by Joe Martin, a reporter for the Houston Business Journal.
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