Health Care Reform and Small Businesses: Understanding the Impacts

Small businesses are the backbone of the US economy, especially in Nebraska where nearly 80% of businesses have fewer than 100 employees. However, the current health care system has made it challenging for many small business owners to provide insurance to their employees due to skyrocketing premiums. The new health care reform law aims to address these issues by reducing costs, increasing choice and competition, and providing tax credits to help small businesses afford insurance. This law also prohibits insurance industry practices that are detrimental to employees and ensures that premiums benefit enrollees.

Key Takeaways:

• The health care reform law includes a small business health care tax credit to help small businesses and organizations afford the cost of providing health insurance to their workers.
• The tax credit is available to small businesses with 25 or fewer employees and annual wages of $50,000 or less, with a maximum credit of 35% of the employer's contribution to employee health care costs.
• In Nebraska, 73% of all employers have fewer than 25 employees and will be eligible for some form of tax credit when they file their 2010 taxes.
• By 2014, the credit will grow to a maximum of 50% of the employer health care contribution and insurance companies will be required to pay at least 85% of premiums back to enrollees as benefits.
• Small businesses with up to 100 employees, along with the self-employed, will be eligible to choose their insurance through the health insurance exchange.
• Businesses with more than 50 employees have the option of either providing coverage or paying a fee to help their employees purchase individual coverage on the exchange.
• The new health care law is supported by groups representing small businesses, such as the Small Business Majority and the Main Street Alliance.

Statistics:

• 80% of Nebraska businesses have fewer than 100 employees (Source: Senator Ben Nelson).
• 73% of all employers in Nebraska have fewer than 25 employees (Source: Senator Ben Nelson).
• 97% of employers with more than 50 employees in Nebraska already offer health insurance coverage to their employees (Source: Senator Ben Nelson).
• The health care law prohibits insurance industry practices such as capping lifetime and annual benefits in group health plans (Source: Senator Ben Nelson).
• In Nebraska, less than 30% of small businesses with less than 50 full-time equivalent employees can afford to offer their employees health insurance (Source: Senator Ben Nelson).

Sources:

• Senator Ben Nelson: "Washington -- The following information was released by Nebraska Senator Ben Nelson" (No specific date or publication).
• Senator Ben Nelson: "Note that in Nebraska, 97% of employers with more than 50 employees already offer health insurance coverage to their employees." (No specific date or publication).