Small Business Owners Still Confused By Health Reform

The majority (56 percent) of small business owners (those with less than 50 employees) incorrectly believe that the Patient Protection and Affordable Care Act (ACA) requires them to provide health insurance for employees in 2014, or that they will be taxed if they do not offer health insurance, according to recent research from private health insurance exchange provider eHealth, the parent company of eHealthInsurance. The Small Employer Health Insurance Survey noted that this percentage is down from 69 percent in August 2012. Beginning in January 2014, the ACA requires businesses with 50 or more full-time employees to offer their employees health insurance or pay additional taxes. However, the ACA does not require this of businesses with fewer than 50 workers.

Exchanges. eHealth found that only 18 percent of small employers believe that they can confidently define or explain what a health insurance exchange is. In addition, 62 percent said that they do not understand exchanges at all, while 20 percent said they have only a vague understanding of the role exchanges are expected to play. Under the ACA, health insurance exchanges will make subsidized health insurance available for lower income people who do not get health insurance from their employer, starting in 2014. The ACA also created Small Business Health Options Program (SHOP) Exchanges to help small businesses provide coverage.

The survey found that the overwhelming majority of small business owners do not want to be forced to buy health insurance through any single source, whether through a government exchange or through a private marketplace/exchange. Seventy-one percent said they want the option to buy their health insurance coverage from the source of their choice. Only 24 percent said they would prefer to work exclusively with a private company to find health insurance, and 5 percent said they would prefer to work exclusively with a government exchange.

Offering employer-based coverage. Employers offer health insurance to employees because they feel morally obligated to do so, the survey found. Forty-four percent cite this moral obligation as the number one reason they offer health insurance to employees. Another reason that small employers offer coverage is to attract and retain talented workers (31 percent cited this as the number one reason). The survey found that 70 percent of small employers believe it is at least possible their employees would look for work elsewhere if they stopped providing health insurance.

According to eHealth, 67 percent of small business owners said that they would not stop offering their employees health insurance even after the ACA reforms take effect. According to the survey, only 6 percent said they will definitely stop offering health insurance to employees, while another 27 percent said they may stop offering health insurance under certain circumstances. Ninety-one percent of the small employers who are considering dropping insurance for employees said that the cost of providing health insurance will impact their decision.

The survey contains responses from 259 employers with less than 50 employees. For more information, visit

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