According to a recent Kaiser Family Foundation study, about one in four small business owners with fewer than 25 workers do not have health insurance. And when Obamacare kicks in next year, they will face fines if they remain uninsured. This is a problem already worrying many small business owners out there who are not yet able to move forward with such measures because of the financial situation and the sluggish economic recovery. Some are desperately seeking ways to avoid any tax penalties should the gamble that the election winners will appeal Obamacare not pay off. A former insurance executive, Bob Laszewski, has already started exploring exactly how small businesses might be able to skirt a number of the health law’s possibly expensive provisions. The solution he found? Self-insure.  

Indeed, a self-insured plan, the employer is responsible for every worker’s health insurance costs rather than making premium payments to an insurance company on their behalf. This would put the small business owner at risk of the largest and most expensive health events like major surgeries and cancers. Insurance companies can afford to do this because they have so many clients that there are enough people paying in that it negates the costs of those that have to collect. A large enough business with many employees could maybe get away with this too but for small businesses this will be tricky. The Washington Post explains, “only about 10 percent of firms with fewer than 200 employees self-insure – but that number rises to 89 percent among firms with more than 5,000 employees. Many companies that self-insure also buy “stop loss” insurance, meant to protect again unpredictable, especially catastrophic events – the possibility, for example, that a number of employees need an expensive surgery at the exact same time. The Affordable Care Act exempts self-insured plans from a number of mandates: They don’t have to pay an excise tax if they provide more expensive benefits and don’t have to adhere to the 80/20 rule, which requires insurers to spend at least 80 percent of premiums on medical costs…”