Obamacare Forces Small Business To Trim, But Not Eliminate, Health Care Coverage, Survey Says

Most small businesses don't plan to entirely drop health care insurance because of the Affordable Care Act, but their employees may be saying goodbye to some key benefits.

A mere 3 percent to 4 percent of employers of all sizes said they would drop benefits in 2013 due to Obamacare, according to a survey released Tuesday by Midwest Business Group on Health, a nonprofit business coalition. That's a decrease from the 24 percent to 28 percent of employers who said they would drop benefits when Midwest Business Group on Health started doing the survey, just before the law passed in 2010, Larry Boress, president and CEO, told The Huffington Post.

The subsequent studies the business group has conducted every six months revealed a steady drop in that number. The major difference between the acceptance now and the initial knee-jerk reaction, Boress said, is that employers have realized they need to continue offering benefits to attract and retain talent. "If your competitors are offering benefits and you drop them, you're at a disadvantage," Boress said.

Fewer than a third of the employers who said they would drop coverage planned to compensate by raising salaries.

Businesses may nevertheless cut benefits, Boress said. Coverage for dependents may be first on the chopping block. Also, 52 percent of employers said they planned to make vision and/or dental coverage voluntary benefits in 2013, increasing to 55 percent by 2017-2018.

Of businesses with 200 or fewer employees, the latest survey showed that 65 percent were taking a "business as usual," approach, making adjustments, but sticking to their established benefits strategy, while 25 percent subscribed to a "wait and see" tactic, maintaining the status quo until more was known about the impact and final regulations.

One thing they're not necessarily waiting for is to see whether President Barack Obama or Mitt Romney wins the election. "For most employers, the election is really not that relevant a far as what their benefit direction is going to be," Boress said.

Though many employers are firming up their plans, Boress acknowledged that because of the complexity of the law, many small business owners find it "a real challenge" to move forward. "So many parts of the rules, regulations and provisions have not been defined," he said. "For example, by next March, employers have to communicate to their employees how they can buy through exchanges -- and there are no exchanges yet."

Boress said he believes another factor on employers' minds is how to deal with the added costs of Obamacare. Most employers said they expected costs to increase 3 percent to 5 percent under Obamacare, in a survey Midwest Business Group on Health conducted in March. But over the next five years, employers, particularly small employers, expected those costs to go up by 10 percent to 15 percent.

"It's a difficult situation especially for small businesses, when anything that adds to your costs may jeopardize survival," Boress said.

Boress said that whether decreasing full-time and increasing part-time employees or keeping their number of employees under 50 to skirt the requirements of the law, "it's a real strategy employers have to look at, to see if they can avoid the cost and not hurt productivity."

In the meantime, Boress said employers seem like they're ready to play by the rules and adjust to "the new normal." "What employers in general don't like about government is not the standards, but micromanagement," he said. "If they set the rules of the playing field and let them do what they want, employers are fine. But they don't want to be told how to design their benefits or what they should cover. It's like a watch -- tell me it has to tell time and be accurate, but don't tell me what pieces to put in. Let me design it in a way that fits my needs."


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