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Letter: Should small businesses provide health insurance to employees?

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Posted: Wednesday, September 25, 2013 12:00 am

This is an open letter to small businesses of Lodi. Employers should “consider” the advantages of canceling their group health coverage for their employees effective Jan. 1, 2014 if less than 50 full-time equivalent employees are employed. They are as follows:

  • Employees may not be eligible or qualify for the large tax credits if you offer an affordable health plan as defined by the Affordable Care Act (Obamacare). If small employers cancel their health plans, employees can enroll in health insurance coverage if they apply directly through Cover California Insurance Exchange — pre-existing conditions covered.
  • Small employers now have one competitive advantage over larger corporations in that no tax penalty is assessed to the small group employers of less than 50 employees if they do “not” cover their employees. Employers with 50 or more employees are required to provide their employees with affordable health insurance or face expensive tax penalties, which will have to be incorporated in their cost of doing business beginning Jan. 1, 2015.
  • If your competitors cancel their coverage and you do not, you will be at a disadvantage economically since they might have a larger profit margin without increasing the price of product or service, or decrease their prices keeping the same profit margin.
  • Small employers can redirect resources and apply them to employees who merit extra salary, thus improving loyalty of valued employees.
  • Small employers can rid themselves of compliance and fiduciary liability by shifting responsibility to the government.

Please consult your adviser and/or attorney for the pros and cons of canceling.

Darrell Baumbach


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