As the PPACA (Patient Protection and Affordable Care Act) moves along and deadlines approach it is important to understand two major facts about small company healthcare.
According to the U.S. Census Bureau, in 2010, by my addition, there were about 143 million people who worked for companies with fewer than 20 employees. You could probably add another 10 million for firms up to 50 employees. Additionally, according to a 2008 survey by the Kaiser Family Foundation, “…about half of businesses with 3–9 workers offer health benefits to their employees. The ratio grows to about three-fourths for firms with 10–24 employees, to almost 90 percent for firms with 25–49 employees…”
These numbers are important because they figure into the PPACA.
The healthcare coverage that employers will be required to provide under the PPACA only applies to companies that have 50 or more fulltime equivalent employees. Under recent determination an employee who works an average of 30 or more hours per week is considered a full time employee. Part-timers are accounted for by adding up their hours and dividing by 30 to get the number of “full time” employees there would be in the establishment.
Companies that have fewer than 50 FTEs will not be required to provide healthcare coverage under the PPACA and CANNOT be penalized for doing not doing so.
Adding these numbers and reviewing the facts means that we could conceivably end up with 155 million workers, many that currently have healthcare, losing that healthcare coverage. Of course that would assume that their employers would drop their coverage, which makes financial sense, and tell each of their employees to go to the State or Federal healthcare exchanges. No all employers will do that, after all it healthcare provides a recruitment advantage. But many may do so, or provide cash payment for the employee to use to purchase insurance from the exchange. As a result of this, which goes into effect in 2014, we could have 155 million workers getting their healthcare coverage from a government run program.
I will let you decide whether this is a desirable outcome. I think many employees will be less than pleased with this turn of events.
Sign up for free HR Solutions updates via email