For years, we had a health insurance market that was broken for small businesses. Because they had less bargaining power, small businesses paid an average of 18 percent more for the same health insurance plan offered to the bigger business down the street, and their premiums could skyrocket if a single employee got sick.
That made it hard for many small business owners to keep offering coverage and grow their businesses.
But because of the Affordable Care Act, Florida’s small businesses and their employees are getting better choices, starting with new protections that limit the outrageous rate hikes many small business owners faced in the past.
Take Steve Miller’s dilemma: The president of EPReward in Boynton Beach values his 10 employees who run his medical waste recycling business. Though his lowest paid employee makes 2½ times more than minimum wage and receives profit sharing, the one benefit EPReward can’t afford to offer its employees is health insurance. The cost for a company policy is greater than what employees can purchase individually.
ENROLLMENT
Instead, Miller offers a stipend in employees’ pay to offset their cost to insure themselves. Miller, for one, is looking forward to taking advantage of the benefits and affordable health insurance plans provided to businesses under the Affordable Care Act, saying the new health care law will go a long way in helping him attract and retain good employees who he considers “an important investment.”
Beginning in 2014, Florida’s small business owners will have access to a new Health Insurance Marketplace — which opens for enrollment on Oct. 1 — that will allow them to make side-by-side comparisons to find a plan that fits their budget and that’s right for their businesses and employees. Each Marketplace will operate a Small Business Health Options Program, or SHOP, focused just on small businesses, where employers will be able to choose from a range of affordable plans to offer their employees.
CREDITS OBAMA
Small businesses are also seeing savings thanks to new tax credits available to help them cover their employees. Many small businesses with 25 or fewer employees have already received a tax credit of up to 35 percent of their health insurance costs. And beginning in 2014, this tax credit will go up to 50 percent.
Veterinarian Hansel Leavengood of Tampa praised the Affordable Care Act as a benefit to small businesses owners like himself. He estimates he will receive roughly $7,000 in tax credits in 2014 – a savings that will help offset the cost to insure about 14 employees.
“Providing health insurance for the people who work for us is the right thing to do,” Leavengood said in recent conversations with senior HHS leaders. “I get a benefit from Mr. Obama for doing the right thing. The people who work for me need it and appreciate it.”
That’s just one of the ways the law is bringing down costs for small business owners. Insurance companies must also now publicly justify every rate increase of 10 percent or more, which has led to a sharp decline in double-digit rate hikes. Starting in 2014, insurers will have to justify every proposed rate increase, even if it’s a 1 percent bump.
Additional rules require insurers to spend at least 80 percent of small employer premium dollars on employees’ actual health benefits, instead of the insurer’s own administrative costs. These limits have
already resulted in more than $1 billion being returned to small business owners and other consumers.
And the law has also begun to slow rising costs across the system by reducing waste and fraud and promoting higher quality care that emphasizes coordination and prevention. These changes in care delivery have contributed to the slowest sustained national health spending growth in 50 years.
INVESTMENT
Small businesses are the backbone of our communities. And, in an economy where small businesses create two-thirds of jobs, owners and employees deserve a health insurance market with fairer prices, better choices, and greater certainty. Thanks to the Affordable Care Act, that market is on its way.
And while many small business owners have questions about the employer responsibility provision, it is important to note that businesses with fewer than 50 employees – that’s 96 percent of small businesses – are not required to purchase insurance. Of the remaining 4 percent of small businesses with more than 50 employees, most already provide insurance. So the number of businesses that will have to begin offering employee health insurance or pay a penalty is very small.
No business owner wants to drop coverage for their employees. For many, their employees are like a family. For others, offering health insurance is critical to attracting the kind of workers they need to succeed.
By making the health insurance market work better for Florida small businesses, the law is letting them focus on what they do best: delivering great products and services, creating jobs, and growing our economy.
Pamela Roshell is U.S. Health & Human Services regional director. Cassius Butts is U.S. Small Business Administration regional administrator. To receive information and sign up for updates, Florida small business owners can visit healthcare.gov. For questions they can contact their local Small Business Administration or Health and Human Services office at 233 Peachtree St. N.E., Suite 1900, Atlanta, GA 30303, phone 404-331-0100.
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