What every small business needs to know about health care
By Kathleen Sebelius
Long Island Newsday
June 20, 2013
Every day, America's small-business owners overcome incredible challenges to pursue their dreams. But over the years, most have confronted one challenge beyond their control: the rapidly rising price of health coverage. As a result, many businesses have struggled to find health insurance that meets their employees' needs and fits their budget. As we mark National Small Business Week, it's worth taking a closer look at how the Affordable Care Act is ushering in better options for America's 28 million small businesses.
Already, small businesses have benefited from improved accountability and affordability in the health insurance market. Insurers selling to small businesses must now justify any double-digit rate and provide rebates if they spend less than 80 percent of premium revenue on health care and quality. Last year, 3.3 million consumers insured through small businesses received average rebates of $174 - and rebates for 2012 are on their way. Even better, the proportion of double-digit rate increases proposed by insurance companies dropped from 75 percent in 2010 to 14 percent at the start of 2013.
And small employers with lower and moderate wage employees are also benefitting from a new tax credit worth up to 35 percent of their premium contribution. Next year, the maximum tax credit will rise to 50 percent.
Starting in 2014, small business owners will have a whole new way to shop for insurance thanks to the new Health Insurance Marketplace. The small employer section of the Marketplace, known as the Small Business Health Options Program, or SHOP, will give employers with 50 or fewer workers some key advantages that simply don't exist today.
For example, the SHOP will provide busy small employers with clear, straightforward information about plans' pricing and benefit packages before they enroll. Business owners will also be able to make apples-to-apples comparisons and decide up front how much they will contribute toward health insurance costs.
Small businesses currently pay an average of 18 percent more than big businesses for health coverage. SHOP will help small employers lower costs by allowing them to pool the risk with other small businesses buying plans in the Marketplace. And because insurers will be prohibited from hiking premiums if one employee gets sick, businesses will be better able to predict their health care spending.
At the same time, the Marketplace will mean better choices for the self-employed entrepreneurs who are responsible for 23 million American jobs. In fact, one recent study estimated that by making health insurance more affordable and ending discrimination against pre-existing conditions, the law will enable an additional 1.5 million Americans to go into business for themselves.
Open enrollment for the Marketplace and SHOP starts on Oct. 1. But small business owners can start getting ready right now by visiting www.sba.gov/healthcare. And it's important to remember that, because 96 percent of America's businesses have fewer than 50 employees and most of the rest already offer coverage, the vast majority of small businesses won't be required to provide insurance or to make any employer responsibility payment under the law.
For many small businesses, offering health coverage is a key to recruiting skilled employees. For others, it's a way to take care of their workers. For some, it can even be a measure of their business's success. The health care law allows small employers to offer health coverage in a way that makes sense for their business and works for their bottom line. That's good news for America's small business owners and their employees. And in a country where small employers create two-thirds of jobs, it's good news for the rest of us too.
Kathleen Sebelius is secretary of the U.S. Health and Human Services Department. Karen Mills is administrator of the U.S. Small Business Administration.