Health Care Coverage for Small Businesses

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Small bizThe Patient Protection and Affordable Care Act has brought major changes in the way the health care industry does business. Thanks to the innovative and politically savvy leader we currently have at the helm, Americans no longer have to suffer at the hands of the insurance industry. However, a lot of Americans aren’t clear on how the health care bill will affect them. “One of the remaining issues surrounding the health care act is making sure Americans are educated on the vast amount of changes that are taking place. I would suggest that business owners and their employees visit Healthcare.gov to find out exactly how the new laws will impact their situation,” says Jennifer Smith, Health Law Professor at Florida A&M University College of Law.

There are major changes for those individuals who are running a small business including tax credit offerings, coverage plan options, and the healthcare exchange. Generally, the act will classify businesses with less than 50 full-time employees as a small business.

Health Care Tax Credits – Reducing the Business Costs of Providing Health Insurance

One of the most expensive line items of running a small business is health care insurance. Starting this year, if you are a small business with 2-25 employees and have annual wages below $50,000, you can qualify for a 35% tax credit, which will increase to 50% in 2014. For a small business to qualify for this credit they generally must provide health care coverage to their employees, have less than 25 full-time workers and pay annual average wages below $50,000. This tax credit in effect sets off 35 percent of what you pay out in providing insurance for your employees. 

Coverage plans – Getting Them and Keeping Them

In an effort to make it easier for small businesses to obtain competitive coverage, the health care act allows those businesses with less than 50 employees the ability to change their health care plans without being penalized for the state of health of their employees. Insurance companies will also have to provide small businesses with guaranteed renewals, which prevent companies from canceling insurance due to employee illness.

Now, even if you are a small business with only two employees you will be eligible to receive the same small business insurance rates that are being offered to any other small business in the state. This is a welcome change to the 18% rates in premiums small businesses previously faced compared to the rates offered to large companies. Also, be aware that until 2014, insurers are still able to charge increased premiums for employees within your company that have pre-existing illnesses.

Health Care Exchange

In 2014 the health care exchange will come into effect, which will allow most small businesses (under 100 employees) to shop for insurance in an exchange. The exchange is basically an insurance marketplace that gives small businesses and individuals the ability to get the competitive rates and more extensive plans offered to large companies.

Since various changes will be rolled out yearly until 2014, small business owners should strive to stay informed on how the Patient Protection and Affordable Care Act can their lower costs and provide quality healthcare coverage for their employees.