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The Effects of the Affordable Care Act on Small Business

Whereas large corporations typically self-insure – paying their employees’ medical bills and hiring insurers to administer health benefits – small businesses purchase group health coverage from insurers and face cost-increasing regulations as they go through the annual ritual of renewing their coverage. Over the next few years, as regulations and mandates are finally implemented, Obamacare will affect how businesses operate – including hiring, employee compensation, growth and so forth.

The Mandate on Employers
Though media attention has focused on the federal and state health exchanges, much of the burden of complying with the Affordable Care Act will fall on business. Nearly two-thirds of Americans with health coverage have employer-sponsored health insurance – approximately 171 million people.
Health benefits are a significant expense for U.S. employers and a substantial portion of workers’ total compensation. The Congressional Budget Office (CBO) estimates that the required coverage for an individual will cost $5,800 a year or more in 2016 – the equivalent of an additional $3 an hour “minimum health wage.” Family coverage could cost more than twice that amount.
For instance: The cost of employee health benefits averages $2.70 per hour, according to the Bureau of Labor Statistics, representing 8.5 percent of private industry workers’ total compensation.
The Kaiser Family Foundation’s annual survey of employer health benefits found the average cost of an employee family plan was $16,351 in 2013.

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Contact Steven Cosby with questions or to request more information and to schedule a healthcare plan evaluation, savings analysis or group plan solution for your company.