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Small Businesses

Utah small business offers health benefits to attract good employees, but costs keep skyrocketing…

Contractor offers employees health insurance but struggles to compete

For 35 years, Fred Ochsenhirt has owned a small drywall and contracting business, Ochsenhirt Drywall and Construction.  He feels strongly about providing a health insurance benefit to his 4 employees, even though very few of his competitors do the same. As premium costs escalate, he’s finding it harder to compete in the bid process for contracts because his business costs are higher. 

I provide health insurance” says Fred, “but it’s a big challenge to compete with companies that don’t.”  The slow-down in construction over the past year has significantly reduced the amount of drywall work available, making it even more difficult to cover the employer portion (50%) of the company’s monthly premium.

Because there are so few individuals in this company’s health insurance group, a significant health claim by any one employee or dependent causes huge increases in the overall premium.  At the last renewal, premiums rose 20%, and coverage for a family with children now costs more than $1,200 per month.  Even with premiums that high, the employees have had to fight with the insurer to pay claims.  “It’s hard to find good insurers.  Not many insurance companies are interested in a group as small as ours.” says Fred.

The Patient Protection and Affordable Care Act makes health insurance affordable for small business owners

In 2014, the reform creates Health Insurance Exchanges, or competitive marketplaces, where small businesses and their employees, the self-employed, and the uninsured can purchase affordable coverage. For the first time, small businesses will be able to pool their buying power and have access to the same quality plans only available to large firms today. Through the Exchanges, small business owners and workers can do one-stop comparison shopping for an affordable plan that offers lower rates like what big businesses pay; stable pricing from year to year; lower administrative costs, and choice of quality plans for employees.

Effective immediately, Health reform provides tax credits for small businesses to help them offer employee health insurance coverage—if they choose to do so. Small businesses that provide coverage for their workers will receive immediate help with their premium costs, and additional firms that initiate coverage this year will get a tax cut as well. This sliding-scale tax credit is worth up to 35 percent of a small business’s premium costs in 2010. On January 1, 2014, this rate increases to 50 percent. Firms can claim the credit for 2010 through 2013 and for any two years after that. To qualify for the tax credit, businesses must have fewer than 25 employees and average annual wages of less than $50,000—and the full tax credit is available to those with 10 or fewer employees and average annual wages of $25,000 or less.

Starting in 2014, affordable plans in Health Insurance Exchanges will have a guaranteed set of minimum benefits—to eliminate fine print surprises that often face those who don’t have the purchasing power of a large corporation or group.

The reform exempts all small firms with fewer than 50 employees from the employer responsibility requirements that begin in 2014. This means that 96 percent of all firms in the U.S. or 5.8 million out of 6 million total firms will be exempt. Many small firms that do not currently offer coverage will be more likely to do so under reform – because of new tax credits, lower premiums, and better choices.

Small businesses that want to promote healthy behavior have access to health plans for their workers that provide free preventive care.

For those small businesses with workers who have been uninsured for several months, or denied a policy based on “pre-existing conditions,” a high risk pool will immediately offer insurance, and assistance to help pay the premiums.