New Year, new health insurance options for small businesses

BY MATT VARILEK

There’s no doubt the federal website associated with the Affordable Care Act got off to a rocky start last fall. But with recent improvements to the website and to our health care system more generally, the arrival of the New Year is a good time for small business owners to take a fresh look at their health insurance options. Because whether you’re someone who loves the Affordable Care Act … or feels something short of true love … you still need to understand it so you can make smart choices for yourself and your employees. At the Small Business Administration, we’re continuing our ongoing efforts to make sure small business owners can access the information they need to make those choices.

For years, we had a health insurance market that put small businesses at a disadvantage. 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 offer coverage and still turn a profit.

The Affordable Care Act is no silver bullet – but because of it small businesses and their employees in Minnesota, North Dakota and South Dakota are getting better choices, starting with new protections against the outrageous rate hikes many small business owners faced in the past. Also, we estimate that in the three states, over xx thousand small businesses employing xx people will be eligible for an average tax credit of $xxx.

Greater availability of more affordable coverage also stimulates entrepreneurship by freeing individuals from “job lock,” where would-be entrepreneurs are stuck in a job largely to preserve their health benefits. Thanks to the Affordable Care Act people can strike out on their own with more confidence about being able to secure good health insurance. It is estimated that thousands of new start-ups will be created as a result.

Despite the rocky start of healthcare.gov, insurance marketplaces across the country are increasingly delivering on their promise of making it easier to shop for private health insurance, and harnessing the forces of competition to make that insurance more affordable.

So what should small business owners do in 2014?

1) Call a broker or agent. Insurance brokers and agents located throughout your state are now able to enroll small businesses in qualified insurance plans offered as part of the voluntary Small Business Health Options Program (SHOP).

2) Compare options, explore potential savings. Small businesses with fewer than 25 full-time employees who make an average of $50,000 or less are encouraged to purchase SHOP-qualified plans, as this is one condition for receiving employer health care tax credits. Since it first became available in 2010, the Small Business Health Care Tax Credit has provided more than $1 billion in tax credits to small business owners – essentially providing a major discount on the cost of health insurance.

By working with a broker and checking out the options offered on your state’s SHOP marketplace, small business owners will be able to compare and contrast options to find the plan that best meets their needs.

3) Enroll in a plan and fill out paper application for SHOP eligibility.You can get an agent, broker, or navigator to help you, if you want. Using one of these partners to help fill out the application can save valuable time and energy.

4) Send the application to the SHOP Marketplace. After receiving a completed application, the SHOP Marketplace will notify you about eligibility by phone, email or regular mail, if you request it. Once again, this eligibility is one of the requirements for receiving the Small Business Health Care Tax Credit of up to 50 percent of what you spend on your employees’ health insurance. You apply for the tax credit when you fill out your business tax returns for the 2014 tax year.

Dates to Know

If your employee enrollments are submitted between the 1st and 15th day of the month, your group coverage begins the first day of the next month. For example, if your employee enrollments are submitted on Feb. 10, 2014, your group coverage begins March 1.

For enrollments submitted after the 15th of the month, coverage begins the second following month. So, if employee enrollments are submitted on Feb. 18, your group coverage will begin on April 1.

For more information on the SHOP Marketplace, visit HealthCare.gov or call 1-800-706-7893, 9 a.m. – 7 p.m. EST, Monday through Friday. TTY users should call 1-800-7067915. Additional information specific to small business health care is available at sba.gov/healthcare.

Matt Varilek SBA Regional Administrator, Region VIII Matthew.varilek@sba.gov