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Health Care Reform Bill vs Small Businesses


Under the health care reform bill, you as a small business owner won't be required to provide health insurance to your employees, but if you choose to, new small business tax credits will be awarded to you to make covering your employees more affordable. You will also have access to a new insurance exchange program to find the best deal, and the entire process will be simpler.

Will I be required to provide coverage that I can’t afford?


The health care reform bill does not require that small businesses provide coverage to their employees. Instead, the law grants tens of billions of dollars in new tax-credits to small businesses to make it easier for them to provide coverage if they choose to do so.

Small businesses may have to pay up to 18 percent more than large firms for the same health insurance policy in the past.  The independent and non-partisan Congressional Budget Office found that with health insurance reform, premiums for small businesses will go down. 

In addition, health reform protects small businesses from sudden, arbitrary insurance rate hikes because a worker get sick;  because health insurance companies will no longer be permitted to base the cost of coverage on health status.

Starting in 2014, only large businesses who have employees receiving taxpayer-funded health assistance will pay an assessment to help offset the cost of those subsidies to the American taxpayer. Companies whose employees are receiving taxpayer assistance will have to pay $2,000 per full-time worker. (This is less than half of the annual cost of providing health insurance to a full-time worker today).   A business is defined as “large” if it has more than 50 full-time equivalent workers, not counting seasonal workers.  The first 30 workers would be subtracted from the total when calculating the total amount of the assessment.  We estimate that fewer than 2 per cent of  large businesses will be likely to pay these penalties.

Why would it be easier to provide insurance coverage than it was in the past?

The health care reform bill provides at least three tangible benefits that should make it easier and cheaper for small businesses to provide coverage:

First, by allowing small businesses to buy insurance coverage through an insurance exchange—the marketplace where you can shop for health insurance—small businesses will get the benefit of pooling together their employees with millions of others, which will lower their own exposure, lower risk and ultimately lower costs.

Second, operating through an exchange program will  reduce administrative costs for small businesses and their employees by enabling them to easily and simply compare the prices, benefits, and quality of health plans.

Third, many small businesses will be able to get a tax credit to help cover the cost of the coverage they offer. 

Will I be able to pool with other small businesses to buy coverage?

A: Yes.

Beginning in 2014, the health care reform bill requires establishing of state-based health insurance exchanges that pool small businesses and their employees, which will spark competition and give you the kind of purchasing power that big businesses enjoy today.  

The exchange will offer the same types of private insurance choices that President Barack Obama and Members of Congress will have.  Increased purchasing power and competition will make insurance premiums more affordable.  The exchange will also reduce administrative costs for your businesses and your employees, enabling them to easily and simply compare the prices, benefits, and quality of health plans.

Will my employees be able to buy coverage if I cannot afford to provide it?


Employees at small businesses that don’t offer coverage can get tax credits to purchase coverage.

What does the health care reform bill say about all the confusing forms I have to fill out?

The law makes it simple.

Health care bill requires plans to use clear and plain language on insurance forms so that you can easily understand what benefits and what doctors are covered in your plan. And, it will standardize forms to reduce the confusing and overwhelming paperwork that all Americans have to confront today.

What is the small business tax credit and how do I know if I am eligible?

Effective January 1, 2010, health reform makes tax credits available to qualifying small businesses that offer health insurance to their employees. So if your business qualifies for a tax credit, you are eligible right now.

About 4 million small businesses will be eligible to receive tax credits if they provide insurance.

The tax credit is worth up to 35 percent of the premiums your business pays to cover its workers -- 25 percent for nonprofit firms.  In 2014, the value of the credit will increase to to 50 percent -- 35 percent for nonprofits.

Your business qualifies for the credit if you cover at least 50 percent of the cost of health care coverage for your workers, pay average annual wages below $50,000, and have less than the equivalent of 25 full-time workers (for example, a firm with fewer than 50 half-time workers would be eligible). 

The size of the tax credit depends on your average wages and the number of employees you have.  The full credit is available to firms with average wages below $25,000 and less than 10 full-time equivalent workers.  It phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers. 

What if my small business doesn’t offer health insurance today, but I choose to start offering insurance this year. Will I be eligible for these tax credits?


The small business tax credit is designed to both support those small businesses that provide insurance coverage today as well as those that newly offer such coverage.