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My boss is dreading the expense of Obamacare. Should she?

Consumer Reports News: February 04, 2013 09:08 AM

My employer told me she will soon have to pay $1,800 per employee annually for Obamacare. Does that sound accurate? She doesn't provide us health insurance right now.

A You told me in a follow-up e-mail that there are fewer than 50 full-time employees in your company. That's significant, because businesses of that size have no obligation whatsoever under the Affordable Care Act to provide insurance to their employees. So, frankly, I don't know what your employer was talking about.

What is accurate is that the health reform law will make it easier, and in many cases cheaper, for small businesses to provide quality group health insurance for employees. Today small businesses must scramble to obtain insurance on the private market, and many can't afford it. That's one reason that only about a third of workers in small business have insurance through their jobs, compared with 71 percent of workers in companies with 100 or more employees, according to a 2010 survey by the Commonwealth Fund, a nonpartisan health policy research group based in New York.

That will change as of 2014, when every state will have a special insurance exchange, the Small Business Health Options Program (SHOP), where small employers can select from a menu of comprehensive plans to offer their workers. For-profit businesses with 25 or fewer employees and average annual wages of less than $50,000 can get a tax credit for up to 50 percent of their contribution toward the premium in 2014.

Because those SHOP exchanges promise to be more efficient than the current system, the cost of group insurance is expected to drop by more than 7 percent for small employers once the tax credits are factored in, according to a 2012 analysis by the Urban Institute, a nonpartisan Washington think tank. But again, it will be up to employers to decide whether to take advantage of that. And if they don't, employees won't be left uninsured because they can purchase coverage for themselves and their families through their state's individual exchange.

For more information, see our Health Insurance Buying Guide as well as rankings of health insurance plans.
Got a question for me? Ask it here. Please include the state you live in.

Implications of the Affordable Care Act for American Business (Urban Institute)
Jobs Without Benefits: The Health Insurance Crisis Faced by Small Businesses and their Workers (Commonwealth Fund)

Nancy Metcalf

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