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Small Business Owners

"Health reforms must pass this year to help local businesses spur economic growth."
Sole-Proprietor Can't Afford Quality Health Insurance

As a sole proprietor, Mary Phillips couldn't qualify for a group insurance plan, nor did she have an employer to help her shoulder the premium cost.  Her budget only allowed $100 for premiums, and this limited her options in terms of benefits and cost sharing obligations.  Mary’s only option was a high deductible plan or “HSA” that required her to pay for all costs up to $7,500 annually.  After that she still payed 30% of her health care costs.  In addition, the plan does not cover pregnancy or prescriptions.

Fortunately, Mary has been healthy and hasn’t had any major medical costs.  In her 8 years of participation on this plan, she’s paid for all of her medical costs out of pocket and never reached the deductible to claim benefits.  However, business has been sluggish in November and December.  “If I was to get sick and need to visit the emergency room or receive other expensive medical services”, says Mary, “I would have to think hard about whether I could afford to go at allI fear by delaying care, I’d be putting my health in jeopardy.” 

With concerns like these, it is hard for Mary to focus on growing her business. “I don’t expect health care to be free, but if I’m going to be paying a premium for health insurance, I want it to cover the health care I might need,” says Mary.  


The Patient Protection and Affordable Care Act will help small businesses like Mary's to provide insurance for themselves and their employees - and will enable workers to change their jobs, or even set up their own businesses, without fear of losing health coverage.

  • Benefits and protections: Small-business employees who have health insurance will receive the same new benefits and protections as those who work for large employers with group health plans.

  • Tax credits for employers: Businesses with fewer than 25 full-time workers that pay an average salary of $50,000 or less per year get an immediate tax credit of up to 35 percent on the premiums they pay for employees’ health coverage. The credit rises to 50 percent in 2014. How much of the credit you receive depends on how many workers you employ and their average wage. Starting in 2011, small businesses can also get government grants for up to five years to establish wellness programs.

  • New insurance options for employers: Starting in 2011, small businesses can offer “cafeteria” plans, which allow employees to transfer before-tax earnings into accounts that can be used for medical expenses. Starting in 2014, businesses with fewer than 100 workers can buy insurance for their employees through a state-run exchange. Businesses with 50 or more workers will pay an annual penalty if they don’t provide coverage.

  • New insurance options for workers: Starting in 2014, employees can buy health insurance for themselves and their families through an exchange if they work for a business that doesn’t provide insurance. Subsidies or tax credits will be available to those with low and moderate incomes.