The Setting

Small business health care premiums have almost doubled in the last five years, from an average of $ 590 to a whopping $ 1,121 each month. This is believed to have made small businesses less profitable. Owners are now also less likely to get new employees, raise salies, or put more money into their businesses.

Many people are worried that “Obamacare” (Affordable Care Act of 2010) will raise premiums even more. They are both right and wrong, depending on each individual situation. In any case, “about half the public (51 percent), and two-thirds of the uninsured (67 percent) continue to say they do not have enough information about the law to know how it will affect their families” (Kaiser) .

In this changing health care environment, more and more small businesses are considering whether to keep their employees on a group health care plan, or to drop them, and instead give their employees a set amount on their paycheck.

Reasons for Staying with a Group Health Care Plan

First of all, no matter what you give in exchange, taking previous health insurance coverage away from your employees can have them feeling resentful. They can become afraid of what can happen in case of medical emergencies and unexpected illnesses. This may then become a major reason for them to look for another employer.

Numbers-wise, older employees who lose company health coverage will likely have to pay a lot more for individual coverage since insurance companies charge higher premiums the older one gets.

Obamacare gives a tax credit for 50% of the cost of company health insurance, and replaces it with a stipend of sorts, so making it subject to state and federal taxes.

In any case, having 50 employees or more will always be required for companies to provide health insurance to employees.

Reasons for Dropping Group Health Care Plan

Still, Obamacare is designed precisely to make health care affordable to a targeted 95% of Americans. It aims to do this in a number of ways.

In 2014, more than 80% of employees who switched to independent health insurance were eligible for government subsidies to help them afford the costs.

It has set up a “competitive health insurance marketplace” that allows small business owners to spend a fixed amount for employee health care, and lets them compare and choose the most cost effective plan available to them.

Other Changes Being Brought about by Obamacare

Whether for group plans or individual coverage, Obamacare is undeniably aimed at helping the little guys. It provides more benefits the smaller the business is and the lower the income of the individuals, while taxing the wealthy instead. It bans insurance companies fromlining coverage for those with pre-existing conditions. And while it penalizes individuals who do not get coverage, it requires insurance to include preventive care and immunizations at no cost – with the aim of avoiding more serious (and definitely more costly) health problems down the line.