Small Businesses Confused About PPACA

October 30, 2012 ( - Small businesses are uncertain whether they must provide health insurance to employees in 2014. 

The majority of small businesses either incorrectly believe or are not sure whether they must provide health insurance to employees in 2014, according to the Fall 2012 Small-Employer Benefits Survey released by eHealth (the parent company of eHealthInsurance). Results show many small employers still hold misconceptions about their obligations under health care reform, and few are making any long-term plans based on their expectations of how the reform might impact their businesses.

Beginning in 2014, the Patient Protection and Affordable Care Act of 2010 (PPACA) requires businesses with 50 or more full-time employees to provide health insurance coverage for their workers. Businesses with fewer than 50 employees, however, are exempt from this requirement, although employees may be required to purchase their own coverage.

Based on their size, only two of the businesses surveyed would be required by the PPACA to offer health insurance coverage to employees in 2014. But one-third (34%) incorrectly believed they would be required to buy insurance for employees in 2014, while 35% were  unsure. Nearly 70% either incorrectly believed or were not sure whether they would be required to pay a tax for not providing health insurance in 2014. Only 31% of respondents correctly said that reform law does not require them to pay a tax if they do not offer insurance.

Another part of the PPACA that does not factor in employers’ strategies is health insurance exchanges. A majority of small-business owners (78%) said they were unfamiliar with them and how the exchanges could impact their businesses. Government-run exchanges, which are slated to come online by 2014, would make subsidized health insurance available to individuals who do not have access to health insurance through an employer.

The survey also explored employers’ willingness to adopt new cost-saving strategies, as well as their attitudes for imposing penalties related to employees’ participation in wellness programs. To reduce costs, more than half (51%) said they would increase employees’ share of premiums. Nearly 40% would consider increasing employees’ deductibles. Nearly half the employers surveyed (44%) felt it would be fair to impose penalties on employees who do not participate in wellness programs.



Additional survey results include:

  • 83% of small employers said they review their companies' health plan benefits once a year;
  • More than half of all small employers (59%) ask their employees for input when reviewing their company's health insurance benefits, while 28% of employers said they never ask their employees for input;
  • 68% of employers said they had no plans to drop coverage for employees in 2014, compared with only 3% who did plan to stop offering group health insurance coverage;  and
  • Nearly a third (29%) of employers said they would consider dropping health coverage for employees in 2014.


    eHealth's Small Employer Health Insurance Survey report can be downloaded in full at The survey was conducted anonymously online from August 15 to 22 and gathered responses from a total of 439 small businesses that had purchased health insurance policies through Of those who provided insurance, 95% had between one and 10 employees.