What Health Care Reform Means for Small Businesses

March 26, 2010, WASHINGTON – Recently, the House of Representatives approved health insurance reform legislation that aims to bring down the skyrocketing costs of health care.

“Health care reform has been debated for almost a full year,” Congressman Bart Gordon said. “Now is the time to move forward, look at how this plan benefits families and small businesses, and address the economic challenges our communities are facing.”

Under the bill’s reforms, 96 percent of U.S. businesses will qualify for new tax credits and will not be subject to any penalties. More than 12,000 such small businesses in Gordon’s district in Middle Tennessee will qualify for these tax cuts, which will reduce costs if they choose to provide health insurance to their employees.

Gordon encouraged Middle Tennessee small business owners to learn how the bill may affect them and their businesses.

If you own a small business with 50 or fewer employees and average wages of less than $50,000:

• You are not required to provide health insurance coverage to your employees.
• If you choose to offer health insurance, you will be able to join with other small businesses to purchase private insurance at lower group rates through a purchasing pool, or exchange, as of 2014. Through this exchange, your employees will have a wider choice of plans, group rates and lower administrative costs.
• Qualified businesses that purchase insurance through this exchange will be eligible for a tax credit of up to 50 percent of the cost of their part of the premium, as of 2014.

If your business has 25 or fewer employees and average annual wages of less than $50,000:

• All of the benefits listed above apply.
• In addition, if you choose to offer your employees health insurance, you will be eligible for a tax credit of up to 35 percent to cover the cost beginning this year. In 2014, these tax credits will increase to 50 percent and will be expanded to all small businesses with fewer than 50 employees.

If any of your employees are currently expensive to insure because of their age, a pre-existing condition, or a serious illness:

• Insurance companies will be prohibited from charging you higher premiums due to these conditions.

 If you are an employee at a small business and already have health insurance you are happy with:

• These reforms will have no effect on your current health plan, choice of insurance company or choice of doctor.

If you are an employee of a small business and your employer does not provide health insurance:

• You may receive a tax cut to help you purchase your own insurance from the private sector, as of 2014. A family of four with an income of up to $88,200 would qualify for the credits.
• You will be able to purchase an insurance plan as an individual from private insurance companies competing in an exchange. Individuals participating in the exchange will receive group rates similar to those enjoyed by employees at large companies or members of unions.
• Because the bill will not create a government-run insurance program or public option, you will not be applying for government-run care.
• You will be able to choose from a menu of options from existing private insurance companies, similar to those available to Members of Congress through the Federal Employee Health Benefits Plan.