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Continued from page 36 KEY POSITIVES Here's a rundown of how you may benefit from some of the law's provisions: • Competitive exchanges Competition is good. That's the theory behind the new statewide health insurance exchanges that are designed to allow small businesses to shop for plans from competing carriers. These exchanges will be available for employers with 50 or fewer people in 2014. "To understand how the exchanges will work, imagine navigating to a travel website that aggregates airfares," explains Karl Ahlrichs, benefits consultant for Indianapolis-based insurance broker Gregory & Appel (gregoryappel. com). "You type in your parameters and the site sorts your options and you pick what you want. That's what employees will be doing with the exchange sites." Under the best of conditions, the new exchanges will also help trim human-resources overhead by providing a host of robust administrative services. "Businesses that send employees to the health insurance exchanges will be getting out of the health insurance management business," notes Ahlrichs. • Premium reform Small businesses have long been the targets of prohibitive premium hikes when one employee is hit with a costly illness. The new law levels the playing field. "Starting in 2014 insurance carriers will not be able to set premiums based on health status, sex or claim history," says Julie Stich, director of research at the International Foundation of Employee Benefit Plans (ifebp. org), a research organization based in Brookfield, Wisconsin. "That will help small group plans where one catastrophic claim can cause health costs to go up," Stich adds. • Penalty exemption If you have 50 or fewer full-time employees, you will be exempt from penalties for not providing health insurance. If you have more than 50 employees and your employees purchase insurance from the new state exchanges, you will pay a fine of $2,000 per employee who does so, excluding the first 30 employees from the assessment. • Tax credit Finally, the law provides for a tax credit for businesses with 25 or fewer employees if the company pays at least half of the employee premiums. (See "Figuring the Tax Credit" on this page.) • Downward pricing pressure The law may also encourage more transparency in the area of fees for medical services, says Ahlrichs. In consumer-driven health plans, people will be given a set amount of money with which they can shop for services. They will be able to go to a website, enter a service such as an "appendectomy" and obtain a list of physicians who perform that procedure, a quality rating and a cost. "Comparison shopping should put downward pressure on prices," notes Ahlrichs. • Transparency Do you know how much your broker is being paid for arranging your insurance? Today, such commissions are buried in your premiums. This may change under the new law as pressure mounts to reduce administrative costs. Brokers may start charging fees for their services, which may well dampen overall costs while promoting accountability and performance. EMPLOYEE MOBILITY There is another hidden benefit to the new law. It may provide smaller businesses with access to higher-quality personnel. "At larger employers there are many high-quality, mid-career professionals who are frustrated because they cannot be very entrepreneurial," says Ahlrichs. "They would love to join smaller organizations where they can try things out, or they might want to band together and start something." In the current system, says Ahlrichs, if these employees quit their current positions, they are uninsurable. "They may have a daughter or wife who is a diabetic or a cancer survivor. Or [the employee] may have some chronic condition. As a result, these [employees] are handcuffed to their desks because of health care." When the exchanges come online, the handcuffs come off. "There will be a significant shift in high-performing talent out of the larger organizations and into smaller ones," says Ahlrichs. "This 40 June 2013 | beautystorebusiness.com Figuring the Tax Credit Do you have 25 or fewer full-time employees? Are their average annual wages less than $50,000? And do you contribute more than 50% of your employeeÕs total premium costs? If you answered Òyes,Ó you may well receive some assistance with your health insurance premiums under the federal Affordable Care Act. You may be entitled to a tax credit of up to 35% of your contribution toward your employeeÕs health insurance for this tax year. The credit will increase to up to 50% for tax year 2014 and 2015. For 2013, the full tax credit is available to employers with 10 or fewer employees whose average annual wages are $25,000 or less. The tax credit gradually scales down as workforce sizes and average wages increase. HereÕs an example: Suppose your business employs 10 full-time workers and the average wages are $25,000. If your annual employer healthcare costs are $70,000, you are entitled to a $24,500 credit in 2013. Starting in 2014 the credit will be $35,000. For some help in calculating your own credit, see the guidance recently posted on the Internal Revenue Service website. Go to irs. gov and click on ÒAffordable Care Act Tax Provisions,Ó then see ÒSmall Business Health Care Tax Credit.Ó Or visit smallbusinessmajority.org and go to ÒHealthcare Tax Credit,Ó then click on ÒGo to Calculator.Ó Consumer-driven health plans give people a set amount of money with which they can shop for services. Get Some Help The U.S. Department of Health and Human Services has launched a website to provide information about the healthcare-reform legislation. For more information, visit healthcare.gov. The Kaiser Family Foundation has created an outstanding compendium of documents summarizing the health-reform legislation. For more information, visit healthreform.kff.org. The Small Business Administration has posted information on how healthcare reform will affect small businesses. For more information, visit sba.gov/content/health-care-health-care-reform. Mercer, the New York-based consulting firm, has mounted a useful site with documents and guidance about healthcare reform geared primarily toward larger employers. For more information, visit mercer. com/us-health-care-reform. could be a huge benefit to small entrepreneurial organizations which position themselves as places where talented people can exercise some freedom." DECISION TIME Many business owners are upset about the minimum level of benefits required by the new law. In some cases those