Repealing and Replacing through the Small Business Lens

We can’t help but view current events through the eyes of our clients. Often, we’ll think “How does this impact them?” and “How can we adapt to help them?” For certain, this is true of the Healthcare debate. Regardless of where you stand on the issue, repealing the Affordable Care Act (ACA) and replacing it with some version of the Better Care Reconciliation Act (BCRA) will bring big changes for small businesses. Here are a few of the major changes to our healthcare system that would affect small businesses the most:

Removal of the Employer Shared Responsibility Payment

The ACA requires small businesses with 50 or more employees to provide adequate healthcare to its employees and their dependents. Failure to do so triggers the Employer Shared Responsibility Payment. The BCRA removes the employer mandate and will no longer require the ESRP from small businesses that choose not to offer insurance.

Removal of the Small Business Tax Credit

Under the ACA, you can receive up to 50% of the premiums you paid for your employees in the form of a tax credit. Your business needs to meet certain requirements and is only available for two consecutive years. The BCRA proposal removes this tax credit.

Encourage HSAs

The BCRA increases the the contribution limits on HSAs (the limits would be $6,550 for individuals and $13,100 for families in 2018). It also loosens the restrictions on who can make catch-up contributions to the HSA.

What does this mean for your small business?

Politics aside, the BCRA rethinks a small business’s role in its employees’ healthcare. For larger companies, the responsibility of finding, purchasing, and managing healthcare coverage could shift to the individual rather than the employer. Employers may still offer a group plan for strategic reasons (talent acquisition, talent retention), but they would no longer be required to do so. For small companies, the government would no longer incentivize providing healthcare coverage through the tax system. We started NationalHR to help companies, large and small, think through the options, see the opportunities, and effectively manage their healthcare plan. ACA or BCRA, that doesn’t change.

7.18.17 Update:

Mitch McConnell was unable to convince enough Republican senators to vote for the BCRA bill, so it looks as though Obamacare will continue to be law.