In essence, the Affordable Care Act is regarded as the most inclusive refurbishment of the United States healthcare industry since the initiation of Medicaid system. Firms across America are called to comply with the set legal requirements for ensuring its workers (Zolna, Kavanaugh, & Hasstedt, 2018). Notably, providing satisfied health insurance to the employee, failure to which they are likely to face a tough penalty. Primarily, such requirement poses a couple of challenges especially to the financial stability of smaller businesses.
Affordable Care Act involves a myriad of guiding incentives as well as exemptions that articulates what employers are required to do. However, such regulations have proved to have inadvertent concerns (Health Care Reform Resources for Employers, 2018). Apparently, ACA encourages small businesses to provide their own finance for the purpose of their health care plans. Notably, instead of using traditional insurance policy, firms are expected to pay the bills of their workers directly (Gurley-Calvez, Bullinger, & Kapinos, 2018). While self-funding was done by most companies in the United States, it is now done by small industries containing between 50 and 100 workers. Despite small firms seeing this option as superior, they tend to stay exempt from the community. Additionally, such businesses stay excused from the national as well as state taxes towards various health care dividends.
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Primarily, such benefits are likely to result in various risks to these small firms. Apparently, unlike big firms, small companies have no diversified workers base as well as financial means that can assist in absorbing considerable overruns in the health care expenditures(Employers | Internal Revenue Service, 2018). To reduce these kinds of risks, small firms mostly buy stop-loss insurance. Essentially, such policies start when a worker incurs high medical expenditures (Turk, 2018). Notably, in case the insurance company suspects that particular small firm possesses an expensive health cover, then it tends to charge slightly higher premium consisting of more deductible (Health Reform, 2018). Keeping in mind that stop-loss policies are often offered on a yearly basis with no renewal guaranteed, small firms could be forced to pay more in case there is a rise in health care cost.
In case an employee at a small firm suffers from a killer illness, then he or she requires intensive medical care for at least two to three years and is likely to cost millions of dollars. The stop-loss cover will definitely pay for the first one year of the bill them it runs out of contract. Apparently, the remaining two years is likely to be covered by the small firm because there will be no other reinsurer who is going to take charge (About the ACA, 2018). Such scenario is likely to hurt the financial stability of this firm and in the long run, can experience losses (For Your Information, 2018). Due to the ACA, many firms are therefore determined and forced to take various financial options to comply with the government regulations of ensuring it works. This means that the health care delivery services have been highly impacted by the extensive cost of premiums especially those that are set to smaller firms.
Noteworthy, financial self-reliance of small companies in ensuring its workers have occasionally destabilized financial stability of such companies. In conclusion, this is because such policies are expensive to maintain and therefore firms are forced to apply stop-loss policies which despite proving reliable to some extent, it pose more risks since it is renewed annually, therefore, a firm can be charged to settle bills of its workers in case the policies expire and there is no firm which is willing to support the firm.
References
About the ACA. (2018). HHS.gov. Retrieved 17 January 2018, from http://www.hhs.gov/healthcare/rights/
Employers | Internal Revenue Service. (2018). Irs.gov. Retrieved 17 January 2018, from http://www.irs.gov/Affordable-Care-Act/Employers
For Your Information. (2018). United States Department of Labor. Retrieved 17 January 2018, from http://www.dol.gov/ebsa/healthreform/
Gurley-Calvez, T., Bullinger, L., & Kapinos, K. A. (2018). Effect of the Affordable Care Act on Breastfeeding Outcomes. American journal of public health, (0), e1-e7.
Health Care Reform Resources for Employers. (2018). SHRM. Retrieved 17 January 2018, from http://www.shrm.org/hrdisciplines/benefits/articles/pages/healthcarereform.aspx
Health Reform. (2018). The Henry J. Kaiser Family Foundation. Retrieved 17 January 2018, from http://kff.org/health-reform/
Turk, A. (2018). Health Home Connect Improves the Health of Aging Homeless Individuals through the Coordinated Entry System and the Affordable Care Act. Public Policy & Aging Report, 27(suppl_1), S18-S21.
Zolna, M. R., Kavanaugh, M. L., & Hasstedt, K. (2018). Insurance-related Practices at Title X-funded Family Planning Centers under the Affordable Care Act: Survey and Interview Findings. Women's Health Issues, 28(1), 21-28.
