Some version of health-care reform will become a reality after the Senate’s passage of a bill the day before Christmas. So is the Senate bill a gift to small business or a lump of coal in their stockings? New York Times blogger Robb Mandelbaum broke down what the Senate bill would mean for small businesses:
How is small business defined?
A small business that employs one to 100 people will be able to participate in a health insurance exchange. But until 2016, states can limit the small-group market to firms with 50 or fewer employees.
What is a health insurance exchange?
States must set up a so-called Small Business Health Options Program (a “SHOP Exchange”) through which small companies can buy insurance. Plans offered on the exchange would have to be standardized for easy comparison and offer a minimum level of benefits. Starting in 2017, businesses with more that 100 employees can participate in the health exchange.
How will an exchange help small businesses?
Insurers would have to treat small business groups as members of a single risk pool – the bigger the pool, the lower the cost. Beginning in 2014, insurers could not exclude a person based on his health status and could vary premiums only by geography or age. All insurers would have to provide a minimum benefits package defined by law, and there would be limits an employee’s annual deductible, said Mandelbaum.
What about the employer mandate?
The smallest firms will not be forced to buy health insurance for employees. In most cases, companies with more than 50 full-time workers that do not offer insurance would be subject to a penalty of $750 a year for every full-time employee.
Small-business tax credits. From 2010 through 2013, very small businesses would receive a tax credit to offset 35 percent of their health insurance costs, provided the firm contributes at least half of the premium. Then, for the first two years the firm buys insurance through an exchange, the credit increases to 50 percent. The full credit is available to firms with the equivalent of 10 or fewer full-time workers paid, on average, less than $25,000; it phases out as the payroll, excluding seasonal workers, grows to 25 and wages rise to $50,000, said Mandelbaum.
This article was submitted by Katie Kapler, Director of Online Strategy for Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to firstname.lastname@example.org