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How Does Obamacare AffectYour Business?

Oct 18, 2013

Guest blog by Alie Johnson, the Storage Facilitator

Health care reform is kicking into high gear, and the new health insurance marketplaces put in place by the Affordable Care Act opened in October. So, how do these changes affect your self-storage business?

The effect depends largely on the size of your company, said Carlos Kaslow, general counsel for the Self Storage Association. Here’s a look at how the law known as Obamacare affects small, midsize and large self-storage businesses.

Mom-and-Pops
Most of the self-storage operators in the United States are quite small. More than 30,000 owner-operators in the U.S. have just one facility, according to the Self Storage Association. By comparison, about 2,500 midsize to large companies have more than one facility.

The bulk of the phone calls that the Self Storage Association has received about the Affordable Care Act has come from the owners of the smallest businesses. Yet, Kaslow said, “the direct impact on small self-storage owner-operators is negligible.”

Here’s how Obamacare affects small self-storage businesses.

  • Businesses with fewer than 50 full-time equivalent employees won’t have to pay a penalty if they don’t offer health insurance to their employees.
  • Businesses of this size can offer insurance through the Small Business Health Options Program (SHOP) Exchange, a special health insurance marketplace for small business owners and their employees, according to HealthCare.gov. To use SHOP exchanges, business owners must offer insurance to all full-time employees—those who work an average of at least 30 hours a week. In some states, at least 70 percent of full-time employees must sign up for the insurance, according to HealthCare.gov
  • In 2014, the SHOP marketplaces run by the federal government will offer only one plan, said Jeffrey Ingalls, president of insurance and brokerage consulting firm The Stratford Financial Group and author of the book “Healthcare Reform Made Easy.” He noted that in those states, “it isn’t a real good choice for that first year.” But, he said, SHOP marketplaces run by the states might provide more options in 2014. For example, he said, the marketplace in New York features 17 insurance carriers, and each must offer at least one plan at each of the four levels of coverage: platinum, which pays about 90 percent of health care expenses; gold, about 80 percent, silver 70 percent; and bronze, 60 percent. Starting in 2015, all SHOP exchanges will offer an array of plans.
  • Businesses with fewer than 25 full-time equivalent employees who each make less than about $50,000 a average might be able to obtain tax credits for providing health insurance to full-time workers. These credits could pay up to 50 percent of employees’ premiums, according to HealthCare.gov. The provisions of the health care law that tend to apply to small businesses are “carrots, not sticks,” Kaslow said.
  • These businesses must comply with various requirements, which can add administrative work. For example, all companies covered by the Fair Labor Standards Act had to notify their employees about the health insurance marketplaces by Oct. 1, 2013, according to the U.S. Department of Labor. “A lot of businesses too small to be subject to the employer mandate think there’s nothing for them to do,” Ingalls sid. “But there are a bunch of things for them to do.”

Midsize Businesses
Self-storage businesses with 50 to 100 employees probably bear the biggest burden when it comes to complying with the Affordable Care Act, according to Kaslow. That’s because they must follow an extremely complex law, but they typically don’t have the resources to easily do that, he said.

Here’s how Obamacare affects these businesses.

  • Businesses owners on the cusp of having 50 full-time equivalent employees need to carefully count their employees’ hours to make sure they know how the law applies to them. “If you have a bunch of part-time employees, that can add up,” Kaslow said.
  • Starting in January 2015, businesses that have 50 or more full-time equivalent employees and don’t offer health insurance must pay a fine of $2,000 per full-time employee per year, not counting the first 30 employees. Employers of this size that offer health insurance that doesn’t meet minimum standards must pay $3,000 per year for each employee who qualifies for a subsidy in the health insurance marketplace. Self-storage companies of this size that don’t offer health insurance now will need to crunch the numbers to see whether it makes more sense for them to provide coverage that meets federal requirements or to pay the penalty, Kaslow said.
  • Like businesses of other sizes, these enterprises will need to rely heavily on insurance professionals, such as brokers, who have thorough knowledge of the law. Any company of any size that’s working with a broker should have already gotten a report that describes exactly how Obamacare will affect that company.
  • Starting in January 2016, businesses with up to 100 full-time equivalent employees will be able to get health insurance for their employees through the SHOP exchanges.

Large Companies
Only a few really big players operate in the self-storage industry, and these companies typically already offer robust health insurance coverage and have HR departments to handle the added administrative burden of Obamacare, according to Kaslow.

“They all basically tout the fact that they provide health care. They’ve been offering it for a long time,” he said.