Queasy About New ACA Delay

NEIL NAKAHODO / Kansas City Star illustration
NEIL NAKAHODO / Kansas City Star illustration
Posted: December 10, 2013

The week was big for small business - and not in an altogether good way.

On the heels of Black Friday came Small Business Saturday, a national initiative started three years ago by American Express to spotlight the commercial little guy.

But before all the shopping hype kicked in, small business got other attention that week - from Washington.

The Obama administration announced that an easier way for small-business owners to shop for health insurance on the Affordable Care Act exchange would not be available starting in January, as originally planned.

The Small Business Health Options Program, or SHOP, an online site to compare qualified ACA plans and enroll employees, will not accept sign-ups until November 2014. The delay is for improvements to that portion of www.Healthcare.gov, officials said.

Going through SHOP is a must for small businesses to qualify for health-care tax credits. Until the website is ready, businesses wanting to enroll will have to go through a broker or insurance agent, or deal directly with an insurance company.

In other words, already time-crunched, financially squeezed small-business owners have more to stress over.

"The impact of the delay is just prolonging my worry about the net effect of the legislation on my company," said Evan Malone, president of NextFab Studio, a high-tech workspace and incubator for art, technology, and entrepreneurship in South Philadelphia.

His company of 23 employees is actually not directly affected by the law. Only businesses with 50 or more full-time employees or full-time equivalents are required to offer health coverage to employees by January 2015.

David Dickson, the Philadelphia District Office director for the U.S. Small Business Administration, said that of the 727,000 small businesses in his 40-county territory, only 29,000, or 4 percent, have 50 or more full-time employees.

Those companies face financial penalties if they fail to provide appropriate coverage to their employees.

Regardless of size, no small business can afford to snooze through any of this, Dickson said. Even businesses that won't be required to provide health insurance can qualify for tax credits. That's why Dickson does not intend to discontinue his traveling tutorials anytime soon.

"What worries me more than anything else is you have business owners making decisions with poor information," Dickson told the Business Association of West Parkside at its meeting last month. "There are some great financial implications in this."

Virtually all in attendance were owners of businesses too small to be required to provide health coverage. But they might one day be big enough.

Among them was Don Shump, who started his one-man Philadelphia Bee Co. almost two years ago. It provides bee products, including honey, wax, and pollen, all gathered and made within the city.

"I'm looking to hire employees - that's part why I'm here," he said. Nothing he heard from Dickson would discourage him from doing so, Shump said. In fact, he sees an upside.

"Tax credits - that would be an incentive," Shump said.

Starting in 2014, those tax credits increase to up to 50 percent of an employer's premium contribution.

Marjorie H. Ogilvie, an owner of Philadelphia Business & Technology Center, where the West Parkside business association met, said her 25-year-old company offers insurance to its 18 full-time employees - at a cost of $60,000 a year. With tax credits, "we might consider including the whole family," Ogilvie said.

At NextFab, a four-year-old company with $1 million in annual revenue, all 23 employees are offered a high-deductible plan paid for by the company. Malone said he believes insurance helps attract and retain employees.

NextFab's current plan is with a new provider, after the original underwriter came back with a renewal proposal with a premium increase of 100 percent.

Malone attributes the jump to insurance companies bracing for the effect of more claims resulting from the coverage-for-all aim of the ACA. He settled for "an unwelcome" 30 percent increase with the new provider.

"It comes at a cost of making my business more successful," Malone said. "It's a significant additional expense."

With so much else to do, including co-owning Rex1516, a tiny Southern cuisine restaurant in the city where health insurance is also offered, Malone has been relying on a benefits broker.

Of the latest SHOP enrollment delay, that broker, Michael Lagowy, president of Strategic Employee Benefits Services of Philadelphia Inc., said: "That has been - what is the word I'm looking for - frustrating."


dmastrull@phillynews.com

215-854-2466 @dmastrull

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