Fewer than half of small businesses in the U.S. insure workers, according to a U.S. House Committee on Small Business.
Now that the U.S. Supreme Court has ruled that President Barack Obama's health care law, the Affordable Care Act, meets constitutional muster, as of Jan. 1, 2014, all businesses that employ 50 or more full-time workers, or the equivalent, will have to provide coverage for their workers or pay a $2,000-per-employee penalty.
Regardless of how individual companies react to the new health care law, they're all going to pay more, said Steve Dust, CEO of the Greater Cedar Valley Alliance & Chamber.
"The court has said it's not a penalty but a tax, and businesses and individuals are going to see increased tax bills associated with complying with this monster law," Dust said after the ruling.
How much the law will harm businesses remains to be seen, Dust noted.
The $2,000-per-employee charge is called a "shared responsibility payment," which the government will slap on businesses with more than 50 workers if they don't provide "affordable" health benefits -- as defined by the government -- to full-time employees.
The fine goes to $3,000 if any worker has to take a tax credit or has to enroll in state health exchanges because his or her boss pays less than 60 percent of the full value of the coverage or the premium the employee pays is more than 9.5 percent of household income.
A potential "safe harbor" for the first year the law takes hold, 2014, might allow small businesses to skirt the penalty if they can show the government their health coverage is affordable. But the business will have to demonstrate to the U.S. Internal Revenue Service by showing the government the wages that it paid to employees, instead of reporting to the government the employee's total household income.
Some businesses worried
Businesses are worried, said John Monaghan, president of Group Benefits Design Corp. in Waterloo, which designs health plans for about 200 companies in Northeast Iowa.
"What I see out there as the primary concern of my employers that I serve is they're extremely concerned with what's going to happen with insurance rates in 2014 and beyond," Monaghan said.
One of the concerns is that premiums will rise, given that insurance companies will have to accept all comers, regardless of pre-existing conditions, Monaghan said.
"Unless we find a way to prevent people from purchasing insurance only when they need it, premiums will increase at a faster pace than in the current market," he said, noting that rates over the past five years have increased between 8 and 12 percent annually.
The law requires every individual to carry health insurance or pay a fine.
Chief Justice John Roberts declared it a tax in casting the deciding vote in the landmark 5-4 decision that came down June 28.
Proponents of the law said it was designed to bring everyone into the insurance system to share the burden of skyrocketing medical care cost -- chiefly young, healthy people who often bypass the expense of carrying health coverage.
Monaghan wonders if the mandate will achieve that goal.
"Although the penalty was deemed a tax, the penalty is so low, some might think they're financially better served by not taking insurance until they need the insurance and paying the penalty tax," Monaghan said.
