More Healthcare Headaches for Small Business Owners

Author: Katie Truesdell Date: July 01, 2014

With insurance premium increases on the horizon, states and small businesses address Obamacare’s challenges.

Sixty-five percent of small businesses will see their health insurance premiums increase under the Affordable Care Act, according to a federal actuarial report conducted by the Centers for Medicare and Medicaid Services and published in February 2014.

It will increase due to a section of the ACA that prevents insurance companies from pricing policies according to health status and limits the price differential by age, according to the report.

“The recent report from the Obama Administration confirms what many small business owners already knew,” says Kevin Kuhlman, manager of legislative affairs at NFIB. “Increased requirements and mandates combined with new taxes and fees on small business health insurance products necessarily lead to higher costs.”

The report did not give an estimate for how much of an increase small business owners can expect, and Kuhlman says that the experiences will vary by state and insurance provider.

States Address Insurance Plan Changes

So far, many small business owners have been able to avoid, or delay, more significant premium increases associated with the ACA by taking advantage of early renewal options for their 2013 health plans. Some states likely will allow continued extensions beyond 2014, and Kuhlman suspects many more small business owners will take advantage.

State lawmakers, however, are still considering whether to extend noncompliant plans and how long to extend them. Kuhlman estimates that in states that allow continued extensions, small business owners may be able to delay more significant ACA-related premium hikes for an additional one to three years. But it will take several months before the dust settles and we learn where each state stands.

Small Business Seeks Relief From the ACA’s Harmful Provisions

In the meantime, Kuhlman says, small business owners can and should lobby their federal legislators for relief from the ACA. Specifically, they should advocate for repeal of the small business health insurance tax and repeal of the employer mandate, the most controversial requirement that already has been delayed twice as a result of public pressure.

“Eliminating the employer mandate would relieve midsize business owners from the uncertainty that accompanies it,” Kuhlman says. “It would also eliminate the burdensome reporting requirements associated with the mandate in future tax filing seasons.”

Furthermore, according to a recent study from the nonpartisan Robert Wood Johnson Foundation, eliminating the mandate would not have a significant impact on overall insurance coverage, contrary to mandate supporters’ claims. Under the mandate, a projected 251.1 million people would have health insurance; if it were repealed, a projected 250.9 million would have insurance, a difference of only 200,000. A repeal would, however, mean a loss of approximately $130 billion in penalty payments that fund the ACA.

To find the best solution for your small business, Kuhlman recommends consulting with tax and insurance specialists about all insurance options. Learn more by visiting

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