Healthcare law for small businesses delayed until 2015

Unable to meet tight deadlines in the new health care law, the Obama administration is delaying parts of a program intended to provide affordable health insurance to small businesses and their employees — a major selling point for the health care legislation, according to the New York Times.

The law is supposed to begin next year and calls for a new insurance marketplace specifically for small businesses. But in most states, employers will not be able to get what Congress intended: the option to provide workers with a choice of health plans. They will instead be limited to a single plan.

The 2010 law stipulates that each state will have a Small Business Health Options Program, or SHOP exchange, to help employers compare health plans and enroll their employees. It was supposed to become available to many small businesses in January, but administration officials said they will delay it until 2015 in the 33 states where the government will be running insurance markets called exchanges. And they are delaying the requirement in other states as well.

One of the most important tasks of the exchange is to simplify the collection and payment of monthly premiums, the New York Times reports. An employer can pay a lump sum to the exchange, which will then distribute the money to each insurance company covering its employees.

The Obama administration told employers in 2011 that the small business exchange would “enable you to offer your employees a choice of qualified health plans from several insurers, much as large employers can.” In addition, it said, the exchange would “consolidate billing so you can offer workers a choice without the hassle of contracting with multiple insurers.”

Exchanges are scheduled to start enrolling people on Oct. 1, for coverage that begins in January. However, the administration said that the government and insurers needed “additional time to prepare for an employee choice model” of the type envisioned in the law signed three years ago by President Obama.

Insurers said that the administration was partly responsible for the delay because it did not provide detailed guidance or final rules for the small-business exchange until last month.

Businesses with up to 100 employees will be able to buy insurance in the exchanges. In 2014 and 2015, states can limit participation to businesses with 50 or fewer employees. Companies with fewer than 25 workers may be able to obtain tax credits for up to two years of coverage bought through an exchange. States can open the exchanges to large employers in 2017.

A stated goal of the 2010 law was to increase “consumer choice” and stimulate competition among insurers. The law makes it easier for consumers to compare health plans by defining four standard levels of coverage, ranging from the least to the most generous. The law says an employer can pick a level of coverage and then allow employees to choose among all the health plans available at that level.

Lending to small businesses up for first time in two years

For the first time in 10 quarters, lending to small business owners has increased, according to a report from Inc.com.

The U.S. Small Business Administration’s quarterly report indicated signs that loans to small businesses have increased for the first time in more than two years, which may be a sign that some companies are recovering from the economic recession.

Lending to small businesses increased by 0.4 percent from $584.1 billion in September 2012 to $586 billion at the end of 2012. The increase is attributed to less-restrictive standards for commercial and industrial loans. Although commercial real estate lending continued to lag, demand for both loans remains high, another sign of possible recovery from the economic recession.

The report indicated that big banks lent more to small businesses than smaller financial institutions, with Wells Fargo as the leader. According to the report: “Larger institutions of $1 billion or more helped offset the declines in lending by the smaller lending depository institutions. Small business lending by institutions with assets of $50 billion or more followed the general trend and remained unchanged.”

Do online ads works for small companies?

 

There’s profit to be made by serving as an advertising platform for Main Street businesses, according to Business Week online. Google and Microsoft’s Bing beefed up their neighborhood-specific business listings years ago. AOL bet big on Patch, its network of hyperlocal blogs. Investors chased companies such as Groupon that offer new models for capturing local ad dollars.

One large hiccup: Small companies typically have small advertising budgets. But what’s less widely-known is that small companies have proved reluctant to shift their limited resources from print to online. How reluctant? That’s the big question posed by a Boston Consulting Group survey released by Yelp.

The survey polled 550 U.S. companies with 100 or fewer employees in many industries and found the average respondent is spending only about 3 percent of its advertising budget on Web ads. The companies in the survey spend $63 to $196 per month on Google, other search engines, Yelp, Facebook, Yahoo! Local, YP.com, Twitter, LinkedIn, and Superpages.com.

While BCG’s study didn’t estimate the amount small businesses spend on local advertising, BIA/Kelsey has estimated they’ll spend $36.7 billion annually on Web ads by 2014. More recently, BIA/Kelsey noted that small business spending on all types of ads has flattened, and that money is being used for improving companies’ websites, customer loyalty programs, and other forms of marketing.

For small businesses to want to buy online ads, co-author of the BCG study Kate Manfred told Business Week, word-of-mouth referrals are crucial. In other words, the hardware store owner needs to suggest to the dry cleaner down the street that she try online ads, or it’s unlikely to happen.

Top House tax law writer plans to revamp small business taxes

 

Dave Camp, chairman of the House Ways and Means Committee, has said he wants to pass tax reform legislation and overhaul small business taxes, according to Reuters.com.

Camp has not yet released his plan, but says he wants to cover businesses not organized as traditional corporations, often known as “pass-throughs.”

These businesses include structures such as partnerships, in which profits are not retained by the business or distributed to corporate shareholders, but rather, are passed through to the partners, who are taxed on that income. The top income tax rate since the beginning of the year is 39.6 percent.

That is higher, by contrast, than the top corporate income tax rate of 35 percent, though many large corporations do not pay that rate thanks to tax breaks for selected industries.

The two political parties have sparred over small business taxes. Republicans steadfastly oppose higher rates on wealthier individuals, whom Republicans call job creators. Obama and most other Democrats repeatedly have proposed raising the top tax rates paid by the wealthy.

The Democrats won a key round in this fight in January with a deal ending the “fiscal cliff” stand-off that raised the tax rate on those making an individual income above $400,000.

Democrats want more new tax revenue, presenting a major hurdle to fundamental tax reform, given Republicans’ opposition to this, as highlighted in comments by Camp’s Republican counterpart in the Senate on Monday.

“It has become more and more common for my friends on the other side of the aisle to argue in favor of simply eliminating so-called tax loopholes in order to raise revenue, and then calling that process quote-unquote tax reform,” Orrin Hatch, the top Republican on the Senate Finance Committee said on the Senate floor.

The top Democratic taxwriter, Senator Max Baucus, is also pitching tax reform, but has had disagreements with Senate leaders over the details.

Camp’s draft is likely to include some non-controversial measures, like making permanent a tax break for writing down the cost of equipment for certain business.

The Obama administration has floated the idea of forcing large businesses now taxed as pass-throughs to file as corporations instead, something Republicans have resisted.

Fire destroys small Canadian woodworking shop

A small woodworking shop was destroyed in Morell, Prince Edward Island, Canada, leaving only the north wall standing among the remains of the charred embers, theguardian.pe.ca reports.

The Morell Fire Department received the call that came in as an automatic fire alarm at 12:48 a.m. Firefighters and RCMP were still on the scene this morning.

Four fire departments and 35 firefighters battled the blaze. It appears the nearby house escaped any damage as firefighters battled the flames in bitterly cold temperatures in an effort to save the residence. Morell firefighters were assisted by St. Peters, Mount Stewart, and East River fire departments.

Joe Dunphy Custom Woodworking was a long-established business in the community, with an Island-wide reputation for creating custom-made kitchen cabinets, cupboards and furniture.

Great turnout for Small Business Saturday

Saturday was a successful and profitable day for many small business owners. In Canon City, Colo., Debbie Lake of Classic Furniture experienced a lot of foot traffic for Small Business Saturday, according to CanonCityDailyRecord.com.

“We’ve been busy,” Lake told the site. “We’ve had lots of people out and everybody who has been out, I’ve been thanking them for shopping local.”

This is the second time Canon City downtown merchants joined the Small Business Saturday campaign, created by American Express. Last year, more than 100 million Americans participated in the event, and this year, the event had more than 3 million followers on Facebook, according to WashingtonPost.com.

Former Colorado Springs residents George and Linda Daman shopped at Classic Furniture, where they always enjoy looking at the latest designs in the store.

“We’ve purchased several pieces from here over the last few years,” Linda said. “It promotes small businesses,” George said.

Overall, Small Business Saturday raked in an estimated $5.5 billion, according to a survey reported by WashingtonPost.com. The site also said that consumer sentiment is up the highest it’s been in five years. Even president Obama participated, bringing his daughters Sasha and Malia to shop at One More Page Books in the Falls Church neighborhood of Arlington, Va.

“These businesses create two out of every three new jobs in America, helping spur economic development in communities across our country and giving millions of families and individuals the opportunity to achieve the American dream,” the president said in a statement to Small Business Saturday supporters.

Back in Canon City, Lake is happy to be involved in Small Business Saturday.

“It’s an awesome idea,” she told the site. “We all benefit. One man dreams it. Another man profits.”

Woodworking companies boosted by stimulus

Western North Carolina loggers, crafters and woodworkers benefitted thoroughly from federal stimulus dollars during the worst of the Recession, according to Citizen-Times.com.

Funded with a $1.97 million, the American Reinvestment and Recovery Act grant helped retain and create 164 jobs among 15 small businesses and organizations.

The grant’s success won a local administrator, Land-of-Sky Regional Council, the 2012 Innovation Award from the National Association of Development Organizations.

“That particular program really provided a boost to several small businesses in forest products that were really struggling,” Joe McKinney, executive director of Land-of-Sky, told the site.

Custom furniture maker Boggs Collective received $98,000 to create a cooperative workshop, woodshed, woodworking school and virtual library.

“That was crucial. It supported us in setting up the cooperative,” Co-owner Melanie Boggs told the site. Co-owner of the husband-wife team Brian Boggs, was able to maintain a salary while concentrating on new designs for high-quality chairs that could be assembled by apprentices.

Many other grants were awarded. Some went to companies building dry kilns, some to train loggers to open old roads and trails in private forests. Other groups focused on gathering food products from the forests and developing traditional Cherokee delicacies such as their gourmet mushrooms.

“This has been a win-win partnership with Land-of-Sky and Western North Carolina communities. The forest industry has been severely impacted by the economy, and this project has led to 164 jobs for under- or unemployed forest producers,” said Susan Fox, assistant director of the U.S. Department of Agriculture Forest Service Southern Research Station.

All grant money has been spent, but that investment is still paying dividends, according to McKinney.

“If you talk to people in the forest industry, many of those grants were able to see them over the hump,” McKinney said. “Now they are seeing some rise in their businesses, and they are able to diversify.”

Health insurance rebates expected to save employers millions

An analysis from the Kaiser Family Foundation finds that U.S. businesses that sponsor fully-insured group health plans could share millions of dollars in rebates from health insurers who spent more on administrative expenses and profits than allowed by the Patient Protection and Affordable Care Act (PPACA) by August 2012.
The PPACA requires that insurers pay out a minimum percentage of premium dollars toward health care expenses and quality improvement activities, which limits the amount insurance companies spend on administrative and marketing costs.
Under the new law, large group plans are required to spend at least 85 percent of premium dollars on health care and quality improvement, and small group plans must pay 80 percent. These percentages are described as the medical loss ratio (MLR). If an insurer fails to pay out within a state market segment, they are required to issue refunds to consumers and employers. For group plans governed by the Employee Retirement Income Security Act (ERISA), insurers generally provide rebate amounts to the group policyholder, which often will be an employer or plan established by an employer. Self-funded plans are not subject to the MLR regulations.
Estimated rebates include $541 million in the large employer market, $377 million in the small business market and $426 million for those buying insurance on their own, a Kaiser Family Foundation report found.
Employers are expected to receive rebates of up to 28 percent in the small group market, and 19 percent of the large group market.
All insurance rebate data is based on estimates provided by to the National Association of Insurance Commissioners in 2011. The actual figures will be reported to the federal government for comparison later this year.

2011 AWFS Fair offering small shop seminars

Responding to feedback from 2009 AWFS Fair attendees, AWFS has created a new educational track for the 2011 College of Woodworking Knowledge (CWWK) education program for small shops: Small Shops Ten & Under. Topics will focus on the needs of shops with 10 or fewer employees.
Results from a survey of 2009 show attendees who self identified as coming from shops with 10 or fewer employees showed more than 86 percent wanted a small shop educational track. They also offered suggestions for topics, and these suggestions will be reflected in the track’s lineup.
The development of the CWWK program is led by an industry-wide advisory committee chaired by Philip Martin of Hafele America Company, with representatives from machinery and related tooling, software, millwork, hardware, wood products, independent furniture makers and the trade press. Associations represented include the Architectural Woodwork Institute, Cabinet Makers Association, Hardwood Plywood & Veneer Association and The Furniture Society.
The CWWK includes eight educational tracks: Business Management, Cabinet & Millwork, Software & Technology, Techniques & Applications, Handcrafted Furniture, Safety & Environment, Teacher Track and Small Shops Ten & Under.
Classes at AWFS Fair will begin July 19, 2011, the pre-show day, and continue throughout the four days of the show. The 2011 roster will include the popular SMART program (Special Machinery and Relevant Technology) — technical sessions conducted at machines on the exhibit floor before the show opens.
For additional information on CWWK, contact Nancy Fister, education director, at nancy@awfs.org; or 800.946.2937. Full CWWK program details should be available in March 2011.

Plan for the future, get through the present

I visited a smaller shop in Tennessee recently that is planning for the future while trying to get through the present. They’re taking some jobs a little outside of their area in order to stay busy, but know what they do best and want to focus on that when business picks up.
“As the market improves, I anticipate our strategy will be to narrow our focus to concentrate on the more profitable items,” one of the owners told me. There’s also the matter of a move to a new location, which has been held up in part due to the slow economy.
“We are able to adapt, and we are able to attack the jobs that are a little more challenging,” the other company principal told me. “There’s always going to be a need for high quality millwork.” We’ll have more on this company in CabinetMaker+FDM in September and on www.cabinetmakerfdm.com.