Small- to medium-sized business owners may be breathing a little easier after President Barack Obama on Wednesday signed into law a revised definition of “small employer” under the federal Patient Protection and Affordable Care Act.
Without the revision, firms with 51-100 employees would have been grouped with smaller businesses which, under the ACA, would have required them to offer health coverage to employees that included certain “essential” benefits beginning in 2016.
Those 160,000 employers and their workers also likely would have faced higher premiums, 50 percent or higher in some cases, in part because they would be in a smaller risk pool.
Now most medium-size firms will be off the hook, although businesses with 2-50 employees must still comply with the regulation and individual states still have the authority to keep the broader definition.
Some small business owners will benefit, too, as they now may be more willing to add to their workforce, said Raymond Vargo, director of the University of Pittsburgh Small Business Development Center.
“It gives small business entrepreneurs — the ones who create the most jobs — the flexibility to grow their business.”
The idea behind the original requirement was to assure that employees at smaller businesses had access to basic health coverage. Opposition to the regulations grew as the January 2016 start date neared.
“There’s good intentions, but then there’s the actual reality of running a day-to-day business,” Mr. Vargo said.
With only limited staff, the added administrative and financial burden of complying with the ACA requirements would have added stress to an already struggling sector, he noted. “They battle day to day just to keep their lights on and their doors open.”
The bill passed in Congress with strong bipartisan support and without vocal opposition from patient advocacy groups.
The change was hailed by groups such as the National Retail Federation, the U.S. Chamber of Commerce and the National Association of Health Underwriters, with one retail federation executive stating in a release, “We hope that this is the first of many such changes to Obamacare to improve the law and make it easier for retailers to comply.”
Mr. Vargo thinks that other ACA regulatory provisions such as the 2018 Cadillac tax on higher-cost benefit plans will, in fact, come under increasing scrutiny as their implementation nears.
“It’s such a large initiative and, again, the general intention was good,” he said. “But are we truly seeing a net gain or are we seeing a net loss in our economy?”
Steve Twedt: email@example.com or 412-263-1963.