How Will Health Care Reform Affect Small Businesses?

Last Friday, Jessica Stone of Small Business Majority Group and Regional Director Joanne Grossi of the U.S. Department of Health and Human Services spoke to the Dulles Regional Chamber of Commerce about the impact of health care reform on Virginia's small businesses.

Stone and Grossi discussed changes that small businesses can expect to see in the coming years in regards to the Affordable Care Act (ACA) that was passed by Congress in 2010. The new law is slowly being implemented over a five-year period (2010-2014) to ensure smooth transitions.

Key provisions for small business owners:

• Tax Credits
• Preexisting Condition Insurance Plan for self-employed
• State Insurance Exchange

Employers are eligible for the small business tax credit if the company has fewer than 25 full-time employees (or 50 part-time), average annual wages are less than $50,000 and the employer pays at least 50 percent of the premium cost.

Average annuals wages do not include owner/partner salaries, and business owners can estimate their tax credit with Small Business Majority's online tax calculator. The self-employed are not eligible for this credit.

Individuals, including the self-employed, who have been denied health insurance due to a preexisting condidtion and have been uninsured for at least six months are now eligible for the Preexisting Condition Insurance Plan. This provision is currently in effect and there will be no gap in coverage when the ACA is fully implemented in 2014.

Coming in 2014 will be state insurance exhanges which will allow companies with up to 100 employees and the self-employed to pool together for lower premiums. States will have the option to impose a 50-employee limit, and in 2017, states have the option of allowing companies with more than 100 employees to participate.

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As described in the attached PDF, here are the top five things for small business owners to know about the ACA:

1. Insurance companies are held accountable. Insurance companies must spend at least 80 percent of your premium cost on medical care or they will send you a rebate. Rebates will start arriving in the summer of 2012. 
2. Insurance companies must publicly justify rate increases if they are more than 10 percent. This began in September 2011.
3. Employers can offer insurance for less if they qualify for the small business tax credit. You could qualify for a tax credit of up to 35 percent of your premium.
4. Employers will less than 50 full-time employees are not required to provide insurance.Only large employers will be required to be a fee starting in 2014 if they do not offer affordable health insurance.
5. State insurance exchanges will offer more affordable insurance choices starting in 2014. You will have the types of options as the Congress. 

More information about the Affordable Care Act and small businesses can be found at smallbusinessmajority.org and healthcare.gov.

Tell us in the comments:

How will health care reform impact you or your business?