In written testimony submitted to the Senate Commerce Committee during hearings Thursday on the Affordable Care Act, NJBIA vice president for health and legal affairs Christine Stearns outlined eight “key challenges” that small businesses faced with the new healthcare law.
1. Confusion: Stearns said in her testimony that employers are continuing to struggle in their attempts to understand the new law and its rules. Many have no choice other than to make coverage decisions without fully comprehending their options, she said.
2. Instability: In spoken testimony before the panel Thursday, Stearns said, "There is a great deal of frustration that this instability brings." Businesses, she later wrote, need to confidence to make budget decisions for the coming year and the uncertainty surrounding the law doesn't help that.
3. Small Business Tax Credit Falls Short: Stearns said that while the tax credit has been played up, it's an unrealistic option in a high wage state like New Jersey. In order to qualify for the maximum credit, she says, a business must have 10 or fewer employees with average salaries of $25,000.
4. Many Opt to Renew Early: In order to avoid the coming requirements in 2014, many employers are considering renewing policies earlier than usual, she said. Association members are citing substantial premium increases as their reasoning.
5. Impact on Mom-and-Pop Businesses: Stearns said New Jersey will be forced to change its definition of small businesses come 2014, and along with that will come changes to how partnership groups or married couples obtain their policies.
6. Challenges Ahead: With the so-called "Cadillac Tax" ahead in 2018, Stearns expects employers and plan sponsors to look for ways to circumvent it, thus causing further disruptions.
7. The ACA Does Apply to Small Employers: While small employers often hear that the law doesn't apply to them if they have less than 50 workers, it is "simply not true," Stearns says. Any employer who provides coverage for their workers will be in some form, affected by the law, she said.
8. The Effects of the ACA Must Be Viewed In Context of the Larger Economy: It's not just the ACA that's causing changes for employers, Stearns said. There are additional added costs, such as the recent hike of the minimum wage, that are also concurrently taking place, she said.