In 2007, nearly 23 million of the 45 million Americans without health insurance were small business owners, employees, or their dependents. In other words, the small business community made up about half of the uninsured.
The reasons were many. Healthcare costs were soaring, insurance companies were discriminatory, and coverage was often unreliable when needed the most. These sparked the call for comprehensive healthcare reform, and eventual passage of the Patient Protection and Affordable Care Act (ACA). The law has already benefited a large number of Americans, but often in ways invisible to many in the small business community. Here are ways the Affordable Care Act can help your small business.
New options in the marketplaces: Specifically, the law creates new marketplaces (also described as “exchanges”) for individuals and families to purchase coverage. The marketplaces are designed to hold insurance companies accountable for providing affordable, quality plans. You can access the marketplaces by visiting Healthcare.gov or by calling 1-800-318-2596.
Insurance Cost Savings: The marketplaces usher in competition in areas where insurance companies previously held monopolies. Since the ACA passed, soaring rates have been stabilizing, reaching their lowest point since 1997 at just 4% this year. The ACA also achieves large-scale savings through cost saving provisions embedded in the law. Additionally, the marketplaces offer various cost-sharing plans based on a tier system that better cater to the coverage needs of individuals and their families.
Phase in over time: The implementation of the ACA takes place over a five-year period (2010-2015) in gradual steps. This is to reign in potential cost spikes that could especially hit small businesses and entrepreneurs. The Obama administration decided to delay the “employer shared responsibility” portion (also known as the “employer mandate”) of the Affordable Care Act for one year until January 1, 2015.
Medical decision-making will change: To reduce waste, the ACA incentivizes doctors and hospitals to adopt practices that achieve the best patient outcomes, and encourages the digitalization of payment and data records to ensure ease of storage and speedy accessibility.
So where are the best options for individual entrepreneurs or solopreneurs looking to purchase health insurance coverage? Two words: the marketplace.
First, the new marketplace offers apples-to-apples comparisons between quality plans. These plans offer comprehensive coverage in areas that were previously manipulated by insurance companies to increase premiums, including maternity care, undefined “pre-existing conditions”, and gender-specific conditions.
Now, any plan offered in the marketplace must adhere to a set of standards, which translates to better coverage across all areas vital to your health.
Individuals are also eligible for tax credits, making insurance plans on the exchange much more affordable. Generally, households that fall between 100% and 400% of the federal poverty level are eligible for tax credits on a sliding scale. For individuals, that means an annual income between $11,490 and $45,690.
It is important to note that tax credits are only available to those that shop on the marketplace.
If you are a small business owner who would like to provide coverage for your employees, the ACA devises a useful marketplace known as SHOP, Small Business Health Option, as an option for businesses with 50 or fewer full-time-equivalent employees (FTEs) that will be available starting November, 2014.
According to the Small Business Majority, SHOP marketplaces will offer several advantages; including choice between coverage plans for your employees, how much you pay toward employee premiums, and the ability to compare between health plans side-by-side. These help make the best decision that’s right for your business.
Finally, small businesses may qualify for a health care tax credit worth up to 50% of your premium costs. For example, businesses with less than 25 full-time employees that contribute at least 50% of the total premium will be eligible for a sliding scale tax credit of up to 35% of employer contribution through 2014.
These tax credits came into effect back in 2010, and already more than 3.2 million small businesses have qualified since 2011. It is also important to note that the tax credit is available only for plans purchased through SHOP. And, you can still deduct your premium costs from your taxes.
So what does the ACA mean for small business owners? It provides affordable health insurance options and savings so that you no longer have to fret over medical bills, and instead can focus again on your business success.
How are you handling health insurance in your small business?
About the Author: Dr. Valerie Arkoosh, MD, MPH, is a Philadelphia-based physician, health-policy expert, and advocate for healthcare reform. She is currently running for Congress in Pennsylvania’s 13th Congressional District. Learn more about Val here: www.valarkoosh.com
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