posted on October 11, 2011 11:43
So far, the only noticeable impact of Obamacare for most Americans has been a higher insurance premium – 9 percent more expensive on average, according to the Kaiser Family Foundation. But as we approach 2014, the year in which most of the health care reform provisions take effect, the ambulance service industry is keeping especially close watch. That’s because Obamacare has the potential to influence medical transportation businesses on two fronts: first, as small businesses, and second, as members of the changing healthcare industry.
Changes to Employer-Provided Insurance
There’s good news if your ambulance business employs fewer than 25 people. If you’re paying most of the premiums for your workers (including yourself) you are currently eligible for a credit of up to 35 percent. By 2014, you could receive up to 50 percent back if you select your private insurance plan through the government-operated Small Business Health Options Program (SHOP).
Since the break is only applicable to limited liability companies, and not sole proprietorships, small ambulance business owners may want to incorporate in order to increase company value.
Larger businesses don’t get off the hook so easily. Beginning in 2014, companies with 50 or more employees must either sponsor a health insurance plan for each of their workers or pay penalties of $750 per worker. Since many ambulance companies for sale are small home-based businesses, this change shouldn’t affect value directly. However, it may impact the contracts these ambulance services have with privately owned health care facilities.
Changes to the Healthcare Industry
Health care companies that feel the strain of higher insurance costs may have to cut expenses elsewhere. This could affect contracts with vendors, including medical transportation business providers.
But no changes are as significant as those affecting the elderly population, which makes up an increasingly large portion of customers for non emergency transportation businesses. Seniors will still have access to Medicare, but the way they use the program will change. Over the next decade cuts will be made to Medicare Advantage, which in the past allowed recipients to get their benefits through private healthcare providers. As a result, more seniors will rely on regular Medicare.
Additionally, Obamacare aims to close the “donut hole” – the amount seniors are expected to pay out of pocket after reaching a $2,830 cap on prescription medications but before reaching a $4,550 floor for catastrophic coverage. Until the hole is completely closed in 2020, discounts and rebates will be provided to ease seniors’ burdens.
On the one hand, these changes will reduce choices for the elderly. Seniors may be unable to attend medical offices and clinics formerly covered by private insurers. On the other hand, with insurance costs rising faster than most seniors’ incomes, new rules could mean that low income and middle class seniors are more able to seek medical attention.
Whether the program will ultimately help or hurt healthcare, there is one thing we can all agree on. For now, Obamacare creates uncertainty. As most entrepreneurs know, uncertainty is not ideal for business. What does this mean for ambulance business owners? If you’ve been contemplating putting your ambulance service for sale, this may be the right time to do it. At the very least, you should have a current exit strategy in place for when you do decide to leave the market. If you plan on buying an ambulance business or expanding your current company, making the right reinvestment decisions today can protect your value tomorrow, no matter what happens in the health care industry.