Obamacare: Hurt or Help to Small Businesses?
Since it was passed by Congress two years ago, the Affordable Care Act — more commonly known as “Obamacare” — has hardly stopped sparking controversy. Some claim that the Affordable Care Act (ACA) is a necessary step into the future; others question its constitutionality. The Obamacare debate has split one surprising faction: small businesses. Some advocacy groups like Small Business Majority maintain that the ACA will help make small businesses more competitive and encourage economic growth, while others like the National Federation of Independent Business claim that the ACA will eventually harm small businesses by driving up the costs of insurance premiums. Will Obamacare hurt or help small businesses? Here’s a quick look at the pros and cons.
Pro: Many small businesses won’t have to cover insurance
The ACA requires companies with 50 or more workers to provide coverage for their employees, which is good news for small businesses that don’t employ that many. Smaller companies that are now spending thousands of dollars on employee insurance will have more profits to invest in business expansion.
Con: Obamacare may discourage small businesses from growing
The 50-or-more-employees provision may encourage small businesses to stay small and uncompetitive. Under the ACA, a company with 49 employees has to pay nothing for their insurance— but one more employee means an automatic cost increase of thousands of dollars. The ACA facilitates great financial alleviation for small businesses that want to stay small, but it might harm those that want to become more competitive in the market.
Pro: Small businesses that do provide insurance are eligible for tax credits
The ACA doesn’t mandate businesses with fewer than 50 employees to provide health insurance, but those that do may be eligible for a tax credit of up to 35% of the insurance premiums. Under this provision, small businesses can more feasibly offer health insurance to their employees, making them more attractive to job seekers in the competitive market.Continued on the next page