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Health plan

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The Obama administration is finding it hard to meet expectations raised with the complex Affordable Care Act. Small businesses that had been hoping to shop for competitive insurance plans for their employees will have to wait another year now that the administration has delayed plans to provide an insurance marketplace offering several choices to employers and employees.

The 2010 law calls for a Small Business Health Options Program that would provide a variety of insurance plans ranging in price and benefits, starting in 2014, for businesses with fewer than 100 employees. But the administration, citing “operational challenges,” has delayed implementation of the marketplaces until 2015 in the 33 state exchanges that will be run by the federal government. Businesses in those states will be able to offer only one plan to their workers. The remaining 17 states that operate their own health exchanges can also delay SHOP’s implementation at their discretion.

The delay is a disappointment to small businesses that had supported the federal law based on the promise of the exchanges holding down costs to them and their workers through a more competitive system, much as larger companies and major corporations are able to obtain better rates and coverage because of their size.

John C. Arensmeyer, chief executive of Small Business Majority, which backed the law, told the New York Times, “The vast majority of small employers want their employees to be able to choose among multiple insurance carriers.”

A variety of plans would allow employers to tailor several plans to employee interests and needs based on age and benefits rather than one-size-fits-all. But the exchanges had other advantages as well. They were supposed to make it easier for smaller companies to manage multiple plans, since employers would be able to make just a single payment covering all the plans to the exchange, which would then distribute the premium payments among participating insurance providers. That will also wait at least another year even as the insurance mandate takes effect.

At the same time, some businesses are considering whether to comply with the employer mandate that could add hundreds of thousands of dollars to their costs.

The Wall Street Journal reports that businesses are weighing whether to pay a less costly penalty rather than offer coverage as required for companies with more than 50 full-time employees who work an average of 30 hours or more a week. Failing to do so could costs companies $2,000 for each full-time employee.

One Iowa businessman said he does not make enough money to cover the $500,000 cost of premiums for covering 102 full-time employees. In comparison, paying the penalty would cost about $144,000. Another Pennsylvania businessman said his insurance costs for would soar from $100,000 to $600,000 as opposed to a $240,000 penalty under the mandate.

A National Small Business Association survey found that about 3 percent of the 400 firms questioned plan to pay the penalty. One possible deterrent to choosing a penalty: taxes. Insurance premiums are a tax deductible expense while the penalty is not.

Failing to offer insurance would shift the responsibility to employees to find their own coverage under the law mandating everyone buy insurance.

But other avenues could hurt workers. Some companies are hiring part-time workers or cutting back on hours so even current employees fall below the 30-hour weekly threshold.

Some businesses are just not expanding and choosing to stay below the 50-employee standard that triggers the employer mandate, which can be a job-killer in a sputtering economy as evidenced by last month’s dismal jobs report.

The uncertainty and the constant changing of the rules and guidelines by the Obama administration puts off the day of reckoning for businesses holding off on investments because they don’t know what their health care costs will be.

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