In today’s economy, small businesses have plenty to worry about. However, one consistent concern for both small businesses and their employees – affordable, accessible health care – may be alleviated under provisions in the new health care law.
“I have owned my own business for 19 years and I have struggled for 19 years to cover my employees,” says Aelea Christofferson, owner of ATL Communications, Inc. “I’ve managed to cover them, but it’s been very difficult.”
According to the Oregon Employment Department www.employment.oregon.gov, more than half of the state’s businesses employ fewer than 500 people, with 85 percent of them having 19 employees or less. These businesses have often been hit the hardest with double digit premium hikes and more have been forced to drop their coverage altogether, reduce benefits or increase their employee’s cost-sharing. Today, just over half of Oregon’s businesses provide health coverage to their employees.
Many provisions in the new federal health care reform law are designed to help reverse that trend, says Bill Kramer, an independent health care consultant based in Portland. “One of the main benefits of the new law is that more small businesses will be able to offer coverage to their employees,” Kramer explained.
So how exactly does the new law help small businesses? Here’s a quick look:
1. Provides tax credit to help cover health insurance. This part of the law is already in effect and will help around four million businesses nationwide offer health coverage to their employees. In Oregon, more than 87 percent (67,100) of Oregon small businesses are estimated to quality for this new credit with nearly 25 percent (19,800) eligible for the full credit, according to a new report, “A Helping Hand for Small Businesses: Health Insurance Tax Credits”. The amount of the tax credit an employer can receive works on a sliding scale. The maximum credit goes to smaller employers—those with 10 or fewer full-time equivalent employees—paying annual average wages of $25,000 or less. The credit is completely phased out for employers that have 25 or more full-time employees, or that pay average wages of $50,000 per year or more. Find details and learn more on qualifying for tax credit. Find a health care tax credit calculator at SmallBusinessMajority.org.
2. More health insurance options to fit each individual employee’s needs. By 2014, state Exchanges, transparent and competitive insurance marketplaces, will be required to offer certain benefits and meet cost standards. Small businesses and individuals will be able to compare, price and buy plans.
3. Premiums will be lowered and health insurance companies kept accountable. Health insurance can no longer deny a person with a pre-existing condition.
4. “Simple Cafeteria Plans” will help employees pay for medical costs. In 2011, businesses with up to 100 employees can have them save a percentage of their salary in an account for medical purposes. The percentage of the salary saved in a “simple cafeteria plan” is tax-free.
For another Oregon small business owner, Mike Roach (do we have a release?) of Paloma Clothing in Portland, the new health care law represents real hope in fixing the country’s health care system. Roach and his wife have long tried to look out for their employees, even going against their accountant’s advice to pay for a group insurance policy to help retain long-time trusted employees, like store manager Lee Anne Fitzpatrick. In 2006, Fitzpatrick was dealing with a pre-existing condition and a husband who had just lost his job; and she was looking at having to leave her Paloma position for a bigger company to obtain health coverage. But now, four years later, she’s still a “happy Paloma employee.”
It was an action and risk they needed to take, says Roach, but paying more than half of the health care insurance for each employee has taken a financial toll at times.
He’s most grateful for the tax credit Paloma Clothing is eligible for under the new health care law.
“I’m really excited about the tax credit. It’s misunderstood and not a lot of information has been given to small business owners, but it’s a big deal and a huge help,” says Roach. “I’m much more positive about the health insurance situation, especially since it was immediately available to us. We were able to start paying reduced federal taxes in April.”
With easier access to health care and lower premium costs, small businesses will be better able to provide their employees decent health benefits and the quality of care they deserve, Kramer added.
“The law has the potential to reduce costs for small business and unleash the creative entrepreneurial spirit,” he says. “This should help job growth and improve the overall economic climate throughout the state.”
AARP – If You Run a Small Business, or Work for One
HealthCare.Gov – Small Employers
IRS – Health Care Law Tax Provisions
Small Business Administration – Your Small Business and Health Care Reform
Small Business Majority – Health Reform Q&A