What Effect Will ACA Coverage Mandate Delay Have on Small Businesses?

The Obama administration recently announced that it would delay the implementation of the federal mandate for small businesses to cover their workers' healthcare costs when they employ more than 50 full-time workers. This will obviously help to save companies a considerable amount of money over the course of 2014, but there is now some speculation as to what companies will do with the funds they had previously been allocating to ACA compliance.

In all, close to one in four small business owners who would have had to pay for employee healthcare coverage but now do not have to say they will instead invest that money toward the purchase of new equipment or facilities, according to the latest Small Business CEO Survey from the Wall Street Journal and Vistage. Another one in six or so say they will use the money to hire more employees, while slightly fewer say that they will give current workers raises or other benefits, and only 3 percent say they will slash their prices to become more competitive in their local markets.

The hope that many small business owners seem to have for these efforts is that putting money toward these issues, instead of keeping them in reserve for 2015, when the delayed ACA rules will actually take effect, is that new equipment or facilities, additional hiring, or increased benefits will lead to more success going forward, and thus help to increase revenues or income, the report said. This is based on a large amount of employer optimism that the national economy will continue to improve, as nearly three in 10 now say that they expect it to do so over the next year, and close to 54 percent more say that they think it will remain more or less the same. Only 15 percent or so think it will actually get worse.

Interestingly, despite the concern that many companies would not have been ready for the ACA's coverage implementation, more than three-quarters of those polled said that they would have been, the report said. Less than 7 percent noted that they definitively would not have been, while the remaining 17 percent or so indicated a lack of certainty in this regard.

What else did the survey find?
In all, about 36 percent of all companies considered small businesses nationwide would qualify as having to provide health insurance coverage under the ACA mandate, though the majority of those already do so, the report said. In addition, more than half of all companies nationwide say that they plan to expand hiring over the next 12 months, and another two in five say it will likely remain the same. However, this comes despite the fact that 46 percent of owners polled said that they had not sat down to figure out their costs for hiring in the last three months. Another 29 percent or so said that they only know these costs because of a hire they made recently.

Further, most companies expect that their profitability will increase over the next 12 months, with more than 53 percent indicating that they expect this will be the case, the report said. That compares with slightly more than 12 percent who believe their profits will decline, and more than one in three who think they will remain more or less the same.

Owners looking to increase their financial flexibility may not have to wait for profits to increase, and could instead seek out more affordable small business insurance, including policies for liability insurance, which could currently carry high price tags. Finding lower-cost options would likely help companies find a more solid financial footing going forward.