Business owners are still struggling to understand Obamacare and its likely impact on them and their workers, according to a recent survey by Merchant Cash and Capital, an alternative financing company for small businesses. Conducted in November 2013, the online survey of 542 businesses with annual revenue of less than $10 million found that 40 percent were still uncertain about how the Affordable Care Act would affect them. Nearly a third of respondents believed the health law would hurt them, by increasing their operational expenses.
The vast majority of the businesses in this survey had 50 or fewer employees; 25 percent had no employees at all. At their current size, these businesses would not be affected by the employer mandate when Obamacare goes into effect next January. So, what are they worried about? "A couple of things come to mind," says Mark Lowenstein, Merchant Cash and Capital's marketing director. For one, business owners with self-employment income exceeding $200,000 (or exceeding $250,000 if filing jointly as a couple) in 2013 must pay an extra 0.9 percent in Medicare tax when they file returns this year. Also, many small companies that offer insurance to employees now, says Lowenstein, are expecting to see premiums rise an additional 4 to 5 percent on top of normal annual increases.
Another reason small employers are worried, Lowenstein says, is that they don't understand how to calculate the number of full-time-equivalent employees they have. (Under Obamacare, hours worked by part-timers are totaled to determine the number of full-time equivalent workers.) As a result, business owners are uncertain whether they will pass the threshold that would require them to offer health benefits in 2015. "They don't understand how employees get aggregated," says Lowenstein. "That shows a lack of education and marketing from the government to the small business owner." Citing healthcare-related concerns, one in five of the businesses in the survey said it will put new hiring on hold for now. And one in four said it will halt any growth initiatives--including opening new business locations--in the near future as a result of Obamacare.
Forty percent of the companies surveyed don't currently offer any health insurance to employees and don’t plan to. And relatively few expressed interest in new coverage options available through SHOP (small business health options program) exchanges. In total, less than 20 percent of respondents said they planned to use the SHOP exchange to provide insurance for employees. That includes both business that don’t currently offer a health plan, and ones that do but are considering switching to an exchange plan--most likely to take advantage of expanded tax credits, says Lowenstein. (Read more about the Small Business Tax Credit here.) "We thought overall use of the SHOP exchange would be much higher," says Lowenstein. "It's a great asset to employers in the 5-to-50-employee range, and it seems not to be getting much use. That’s a shame." On the other hand, business owners tempted by the promise of premium tax credits should note that those credits are available for just two years, after which time no more discounts will apply.
Time will tell whether this survey’s findings are reflected in SHOP enrollment nationwide. But since the government has delayed online SHOP enrollment at Healthcare.gov until November 2014--and many states don’t have online sign-up working yet, either--it may be quite a while before it's clear what has business owners spooked. Is it the difficulty of signing up? Or, more worrisome, a general lack of interest in offering health insurance?