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Small Businesses

Local business owner puts employees’ needs first over profit margin by “doing the morally right thing” and offering health care coverage.”

Tony Weller, Sam Weller’s Books

Local business owner Tony Weller struggled to remain competitive while offering health insurance to his employees. His national retail competitors were able to offer bargain prices to customers in part because they didn’t offer insurance to their staffs. As premium costs continued to rise, Tony’s younger employees opted out of coverage, compounding the problem of rising premium costs for his business.

Local business was losing its competitive edge by offering employees health insurance
A gem in the downtown scene, Sam Weller’s Bookstore found it increasingly difficult to keep costs down for their customers while providing their employees health insurance. Weller’s could only afford to cover 50% of the health care premiums for his employees. The result was that more and more of his employees were opting out of the program, leaving higher costs for those who remain in the pool.
“Each year we were slapped with higher costs, and it was becoming more difficult to find comparable bids. We are not a huge company, and we have a demographic of older employees.” The younger employees choose to go without, while the older employees paid the increased costs.

But even more unsettling for this small business owner is that he is in constant competition with the national retail chains that choose not to provide health care coverage to their staff. “We are doing something that very few retail stores do, and that is hurting our bottom line.” If Tony continued to see double-digit increases in health care coverage, he might have been faced with a very tough decision, one which no business owner should be faced with: drop health care coverage for his employees or risk shutting down his store.

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 owners like Tony 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 exempts all small firms with fewer than 50 employees from the employer responsibility requirements that begin in 2014. 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 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.

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.

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