Health care planning for small businesses: 2017

This commentary is based on the February 10 draft outline of the Republican health plan that has not yet been presented to Congress. Of course we expect details to evolve. For fast immediate solutions during the transition period, see my post “Alternatives to Obamacare“.

If you operate a small business then proposed changes to health care legislation are likely a major financial planning concern. For decades heath care choices have dominated small business owners’ decisions, whether access to coverage or managing the cost. In fact, my clients’ obsession with health care questions pushed me to redesign my practice when I first launched my independent small business services in February 2017. Concerns eased for a few years under Obamacare but now return as major business planning concerns.

In many ways the proposal reverts to market conditions that existed before 2010. This post summarizes the current proposal’s impact on small businesses in bullet form.

• Major medical insurance will be less affordable to lower income people after a reduction of premium subsidies.
• Employer-provided health insurance will no longer be a fully tax-free benefit.
• Tax credits for purchasing coverage are available to individuals, not businesses.
• Health Savings Accounts, in place of insurance, would become a more important source of payment for routine health care expenses.
• There is no tax penalty for not having insurance.
• A tax credit up to $4,000 will be available to more higher income people who purchase health insurance. The credit also increases for those over age 60.
• There is no guarantee of coverage for pre-existing medical conditions in the current proposal.
• Young healthy individuals would have incentive to switch to limited benefit insurance.
• Fewer poor people will qualify for Medicaid coverage.
• State-managed high risk health pools would be partially funded by the federal government, similar to the early years of ACA.

This reform proposal will come to Congress for first vote within the next two weeks. Republican leaders have stated that they expect to pass the law without any Democratic support.

I will continue to publish state-specific recommendations to small business owners as details of the transition unfold. State-specific news and coverage options will be updated at FreedomBenefits.net during the transition period.

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