Obamacare and the Effects on Small Business

In 2014 Obamacare goes into affect where in small business with 50 employees or more (up to 500) must offer health insurance to all full-time employees. Though many seem to think that this will have a small effect on the nation’s small businesses, those that fall in between 50 and 500 full-time employees may find it difficult to implement this new mandate.

According to the 2010 US census, there are about 5.7 million small businesses in the United States of America, 97 percent of which have less that 50 employees; but that leaves around 200,000 small businesses that fall under the new Obamacare mandate and another 60,000 small businesses that have between 40 and 49 employees. Although that seems like a small percentage of the total amount of all small businesses in this country, those that fall under the mandate may find it too expensive to afford both payroll and health insurance for all those employees.

In 2011 the average yearly employers cost for health insurance was $4,132 for a single plan. Small businesses with just 50 employees, the minimum amount that falls under the Obamacare mandate, could be looking at over $200,000 in extra costs next year.

Jose Pagliery of CNN Money speculates that the businesses that will suffer the most under Obamacare will be “gazelle” firms, those companies that report an annual growth rate of at least 20 percent. Although “gazelle” firms account for only 1 percent of all small businesses, they provide 10 percent of all new jobs in this country. Pagliery brings up that the more money that these young, fast-growing companies spend on health care, the less money they can spend on hiring new employees and expanding. Only time will tell if Obamacare will end up rising unemployment as a result of hurting these types of small businesses.

One of the biggest problems with Obamacare is that small businesses do not have the staff or the resources to learn the new mandate and all of its nuisances. Companies will have to spend valuable rescores to figure out exactly how much they should expect to pay under Obamacare and what the best choices are for them.

No matter the issues, Obamacare is only half a year away. It is time to get educated about this mandate and to decide a plan of action.

Pagliery, Jose. “Who’s the killer employee under Obamacare? No. 50 or 51?”. money.cnn.com/. 23 May. 2013.

Pagliery, Jose. “The overblown Obamacare myth about small business”. money.cnn.com/. 2013.