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ADP Exec On How Small Business Is Reacting to Obamacare

insurance . / Credit: Healthcare image via Shutterstock

From struggling to understand the law's complexities to figuring out to implement it, the majority of small business owners have health care reform on the top of their minds.

With new aspects of the Affordable Care Act set to go into effect in less than two months, research shows nearly half of small businesses are worried about health care reform and how it will affect them.

Working with more than 400,000 small business clients, payroll services provider ADP has seen firsthand how health care reform is taking a toll on entrepreneurs.

['Wait and See' Period Over For Health Care Reform]

In an email Q&A, BusinessNewsDaily asked Anish Rajparia, president of ADP's small business services division, about how small business owners are reacting to the looming health care changes and how they are preparing for them.

BusinessNewsDaily: What has been the overall reaction from the small businesses you work with to the Affordable Care Act?

Anish Rajparia: ADP has seen mixed reactions to the Affordable Care Act among businesses with fewer than 50 employees.  For example, some small business owners are actively assuming the responsibilities of understanding how the Affordable Care Act will impact them as a business owner, their employees and their business. Others feel overwhelmed and uninformed. A third group seems to be reacting somewhere in between in that they are taking a "wait and see" approach before they commit to making any significant changes to their health care offerings.

These varying reactions align with research ADP has conducted.  In particular, according to a study from the ADP Research Institute, a specialized group within ADP, only 17 percent of human resources and employee benefits decision makers at small- to midsize companies are highly confident they understand their responsibilities under health care reform.

BND: Which aspects of health care reform will positively affect small businesses most?

A.R.: A positive impact we have observed among our small business clients is that the Affordable Care Act could bring more choice around health insurance to small business owners and their employees.  This broader selection can help business owners offer insurance that best suits their individual needs and preferences. In addition, they can now also balance choices of what benefits to offer employees among health insurance, a retirement plan, supplementary benefits or other types of perks.

BND: Which aspects of health care reform will negatively affect small businesses most?

A.R.: The Affordable Care Actis a complex law and requires considerable resources to understand and comply with it. Time spent navigating the act is time not spent on growing the business or serving clients, which means the Affordable Care Act presents an opportunity cost, especially among smaller businesses with scarcer resources. Another impact is that compliance with theAffordable Care Actwill create new work streams, including stringent tracking of data and extra hours determining eligibility.  What's more, penalties assessed for noncompliance could significantly impact smaller businesses financially, many of which struggle to effectively manage cash flow.

BND: How should small businesses be preparing for these changes?

A.R.: Small business owners should become as educated as possible about the Affordable Care Act, because it affects all businesses, but in different ways.  For example, businesses with fewer than 50 employees have more flexibility and are not as impacted as larger businesses are.  Fortunately, there are many online tools and resources available to help owners understand the act. As small business owners better understand the Affordable Care Act and what it means to them, they should decide whether they can manage compliance independently or whether they should partner with a company that specializes in compliance.

BND: How should small businesses be explaining the new changes to their employees?  What's the best way to get their message across?

A.R.: The Affordable Care Act obligates employers to communicate directly with their employees, such as about the notice of coverage options letter that must be delivered by Oct. 1.  But beyond the required communications, there are many other opportunities for small business owners to explain the changes to their employees.  For example, owners that are offering coverage can leverage this time to engage their employees and call out that by offering coverage, they are demonstrating their commitment to being an employer of choice. Small business owners that are not offering coverage can take this time to transparently and consistently offer resources and other tools to their employees so they can be best informed about the exchanges.

Given the complexity of the Affordable Care Act, more information shared with employees is certainly better than too little.

Originally on BusinesNewsDaily.

Chad Brooks

Chad Brooks is a Chicago-based freelance writer who has nearly 15 years experience in the media business. A graduate of Indiana University, he spent nearly a decade as a staff reporter for the Daily Herald in suburban Chicago, covering a wide array of topics including, local and state government, crime, the legal system and education. Following his years at the newspaper Chad worked in public relations, helping promote small businesses throughout the U.S. Follow him on Twitter.

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