Prevention Matters

The Affordable Care Act (ACA) will celebrate its one year anniversary March 23, 2011. Signed into law last year, the ACA puts into place comprehensive health insurance reforms designed to lower health care costs by enhancing the quality of health for all Americans.

The ACA’s small business provisions focus on finding ways for business owners to reduce their heath care costs by ensuring their employees have access to quality, affordable health insurance.

Small business provisions include:

• Small Businesses with fewer than 25 full time employees may qualify for the business tax credit.
• Employer-based health plans that provide health insurance to retirees aged 55-65 can get financial help through the Early Retiree Reinsurance Program.
• Insurance companies will no longer be able to deny individuals with a pre-existing condition, who may now be eligible to join the Pre-Existing Condition Insurance Plan.
• Employees can receive recommended preventive services like mammograms and flu shots without any additional cost to the employee.
• Insurance companies are prohibited from capping the dollar amount of care an employee can receive in a lifetime, or dropping coverage due to a mistake on your application when you get sick.
• Insurance companies must spend at least 80% of premium dollars on healthcare.

Currently four million small business owners have been able to claim a tax credit up to 35% of their health insurance costs. But tax credits are not the only benefit for small business owners. By 2014, small businesses will be able to increase their buying power through state-based health insurance marketplaces. Employers will be able to identify health insurance plans that better meet their needs. The ACA has allowed small business employers to provide health benefits to their employees.

Throughout this week the Small Business Majority will host a series of roundtables and webinars designed to better understand what the ACA has meant to small businesses. Today, the Secretary of the U.S. Dept of Health and Human Services, Kathleen Sebelius will kick off the series in Ohio. The Secretary will join The Consortium of African American Organizations and the National Policy Director of the Small Business Majority. 

There’s good news in the health reform law for small businesses that pay at least half the cost of their employees’ health insurance. Beginning this year, businesses with fewer than 25 employees and with average wages under $50,000 can claim a tax credit on their income tax return. Small non-profit organizations also qualify. As an example, an employer with 10 or fewer full-time employees and with average annual wages under $25,000 (not including what the owner makes), will receive a 35% tax credit on the amount the business pays for employees’ health insurance in 2010. An online calculator to estimate savings can be found at http://www.smallbusinessmajority.org/.

This tax credit will be available to small businesses until 2014; when the credit is scheduled to increase and be available from state-based insurance exchanges which will be operating by that time.

Having health insurance makes a difference. On average, people without health insurance are less likely to get preventive care such as immunizations or mammograms, more likely to miss work, and to have worse health outcomes when they do get sick than people with insurance.

Susan K. Maloney
Managing Senior Fellow
Partnership for Prevention