Small Business Owners

There are more than 28 million small business owners and self-employed individuals in the United States.  Health care is a top concern for small business owners across the country, and many employers want to provide coverage but often can't afford to.

The ACA includes key provisions that will give America's small business owners new options for providing quality, affordable health coverage to their employees if they so choose.  If you own a business with fewer than 50 employees - like 96% of our nation's businesses - you will have NO employer responsibility requirement.  Simply put, you will NOT face any penalties for not offering affordable coverage to your employees.  There are small businesses that would like to offer their employees health insurance and the ACA makes that easier.

The provisions in the law will be an improvement over the current market where small businesses have had many problems obtaining affordable insurance.  For example, many small businesses currently pay as much as 18% more than their larger competitors for the same coverage.  Also, today, premiums for a small business can rise exponentially, simply because of your employees gets cancer or has a serious heart attack. 

The Affordable Care Act will help small businesses in two critical ways: by increasing access and offering affordable options.     

Beginning in 2014, for businesses with fewer than 25 employees:

• There is NO employer responsibility requirement.  There are no penalties for not offering health insurance to your employees.
• There is a sliding-scale tax credit to help you afford to offer employee health insurance coverage, if you have average annual wages of less than $50,000.  The credit is worth up to 50% of your small business's premium costs.
• Covered California has a Small Business Health Options Program (SHOP) that will make health insurance affordable and accessible for small businesses with 50 or fewer employees.

Beginning in 2014, for businesses with 25-49 employees:

• There is NO employer responsibility requirement.  There are no penalties for not offering health insurance to your employees.
• Covered California has a Small Business Health Options Program (SHOP) that will make health insurance affordable and accessible for small businesses with 50 or fewer employees.

Beginning in 2015, for businesses with 50 or more employees:

• There is a shared responsibility requirement for businesses with 50 or more employees.
• This requirement was delayed until January 1, 2015 in an effort to ensure the reporting requirements are implemented properly.
• Under this requirement, businesses with 50 or more employees that don't offer affordable health coverage and have at least one full-time employee receiving a premium tax credit in the new Marketplaces will have to pay a fee.
• However, the vast majority of these businesses already voluntarily offer health coverage.  Currently, 94% of firms with 50-199 employees already offer coverage to their employees and 98% of firms with 200 or more employees do so.

 

 

Small Business Health Options Program (SHOP)

Beginning in 2014, a new "Health Insurance Marketplace" will operate two components: a Health Insurance Marketplace for individuals, and a Small Business Health Options Program (or SHOP) for small businesses.  The SHOP, which in California will be operated by Covered California, will be focused just on small businesses, where employers will be able to choose from a range of affordable plans to offer their employees.  SHOPs will allow small businesses to join a large pool, giving them access to the same types of quality, affordable coverage that only large firms have today.

• Enrollment in the SHOP begins October 1, 2013
• Coverage in the SHOP begins on January 1, 2014

The SHOPs will allow small businesses to make side-by-side comparisons of a range of health insurance plans to find a plan that best fits their budget and that's right for their business and employees.  Beginning in 2014, unlike the current small group marketplace, the SHOPs will:

• Guarantee small businesses a choice of qualified health plans.
• Require health insurers to give small businesses detailed information about the prices, benefits, and quality of their qualified health plans, in a format that lets small businesses easily make apples-to-apples comparisons between the qualified health plans.
• Post quality information and the price for each qualified plan on the SHOP website, along with the results of consumer satisfaction surveys.
• Allow small businesses to either use their existing insurance broker to access the SHOP, or shop for plans themselves.

Choosing the Plan that is Best for You & Your Business

All health plans in the SHOP will cover essential health benefits like those covered by a typical employer health plan.There are four categories of plans in the SHOP marketplace.  They offer similar benefits, but differ based on how enrollees and the plan share the costs of care.  Plans will be offered in four tiers that are based on the amount of coverage they provide:

• Bronze
• Silver
• Gold
• Platinum

The tiers have nothing to do with the quality of care a plan provides.  Rather, they describe the way your employees and the plan can expect to share costs for health care.  What your employees can expect to pay for (things like deductibles and copayments - and the total amount they spend out-of-pocket for the year if they need a lot of care) depends on which plan you choose. 

Small Business Tax Credits

The Affordable Care Act also provides special tax credits for small businesses to help cover the premium costs of employee insurance.  On its website, the IRS has an estimator tool to help small businesses determine their eligibility for the credit and the possible amount of the credit.

• Since 2010, under the Affordable Care Act, there has been a sliding-scale tax credit to help small businesses with fewer than 25 employees and average annual wages of less than $50,000 afford to offer employee health insurance coverage.  From 2010 through 2013, the credit has been worth up to 35% of a small business's premium costs.
• 360,000 small business employers have already used the Small Business Health Care Tax Credit to help provide health insurance to 2 million workers.
• Starting in 2014, the tax credit will be available to small businesses that are in the SHOPs and meet the criteria and will increase to be worth up to 50 percent of a small business's premium costs. 
• The tax credit is permanent, however a business can only claim it for two years.