How Will Health Care Reform Affect Small Businesses?

How Will Health Care Reform Affect Small Businesses?

President Barrack Obama’s controversial health care plan promises changes in every aspect of the health care industry in our country.  Mandatory health insurance is perhaps the biggest (and the most contentious) change under the new program. Currently as many as 15% of U.S. citizens are uninsured. This new law will not only affect how individual Americans consume health care and health insurance, but it will also change health insurance for the business world, as small business health care is overhauled.

These federal and state health care provisions call for states to individually organize Small Business Health Option Programs, or “SHOP exchanges”, which will allow small businesses to pool together to buy health insurance for their employees. A small business is defined as having less than 100 employees. However, individual states have the authority to lower the maximum to 50. Though premiums are only expected to fall between 1% and 4%, in terms of dollars, the savings will quickly add up. While lowering costs, the plan is also intended to increase coverage by an estimated 3%. The small business health care reform is intended to lower costs of health insurance for these businesses which are the backbone of the American economy.

Big Changes in Small Business Health Insurance

Health insurance for small businesses will be changing drastically over the next four years as
States have a deadline of 2014 to have their SHOP exchange programs up and running. In the meantime, businesses with 10 or fewer full-time employees earning under $25,000 a year will be eligible for up to 35% tax credit of their health insurance costs. Companies with 11-25 full time employees earning under $50,000 will be entitled to partial credit. For the first two years that a company purchases their health insurance through the SHOP program they will receive tax credit of 50% of the cost.

As of 2014 employers with over 50 employees who do not offer health insurance will be fined $750 a year per full-time employee. The coverage plan will have to meet certain minimum requirements, including 60% of the employees overall medical costs.  With these group packages insurers will no longer be able to deny coverage to people will pre-existing conditions, and will only be able to vary premium rates by age, tobacco use, and geographic location. Stay current with news and information that may affect your small business with the business advice section of chamberofcommerce.com.