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National Health Care Reform:
Providing Relief to
Maine Small
Businesses |
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There's been so much talk and so much confusion about what national health
reform will really mean for Maine's small businesses,
it's tough for anyone to know what is fact and
what is fiction. We've received so many
questions about the reform, we created this
fact sheet below which we hope will
help.
The new law provides
tax credits for small businesses
NOW.
- Effective immediately, the law provides tax
credits to small businesses to make employee
health coverage more affordable. If an
employer contributes at least half of their
employees' premium costs they may be eligible
for these credits. The credits are offered
on a sliding scale based on number of employees
and amount of wages and cover up to 35% of
premiums that employers pay for their employees'
health insurance.
- Employers with 25 or fewer employees with
average annual wages of less than $50,000 per
employee are eligible for the tax
credits.
- The largest credit of 35% is for the
smallest businesses (10 or fewer employees) with
low-wage workers (annual wages of $25,000 or
less per employee). The subsidies shrink as
companies' workforces and average wages
rise. For example, an auto repair shop
with 10 employees with wages of $250,000 total,
or $25,000 per worker, who spends $70,000 toward
employees' health care costs would receive a
credit in 2010 of $24,500 (35% of the cost of
their premiums).[i]
- This interactive calculator
from the Small Business
Majority provides businesses with a formula
to determine
eligibility.
The new law will help many of Maine's small
businesses.
- Nearly 80% of Maine businesses have fewer
than 10 employees and therefore will benefit
from the largest tax credits.[ii] In 2008,
more than one-third (36.4%) of Maine businesses
with fewer than ten employees offered
insurance.[iii] The law may enable more of
these businesses to offer coverage.
- In Maine, 23,000 small businesses and
359,000 families could get assistance to help
buy coverage.[iv]
- Employers with fewer than 50 employees are
not required to offer health coverage to
workers. The legislation only requires
large employers (more than 50 employees) to
offer health coverage.
- In Maine, 99.6% of businesses with more than
50 employees already offer coverage.[v]
Therefore, only a very small percentage of
Maine's businesses would actually be subject to
the employer requirement to provide health
coverage to workers.
The
new law allows small businesses to enter
a new 'Health Insurance
Exchange".
- Beginning in 2014 small businesses will be
able to buy insurance through the Small Business
Health Plan Options Program (SHOP) Exchange, a
marketplace of insurers that help individuals
and businesses access affordable
insurance. Through the SHOP Exchange,
small business owners and their workers can do
one-stop comparison shopping for an affordable
plan that offers:
- lower rates like what larger businesses pay,
- stable pricing from year to year,
- lower administrative costs, and
- choice of quality plans for
employees.
- Participation in the Exchange is available
to businesses with up to 100
employees.
- There are 41,300 businesses in Maine which
could benefit from the SHOP Exchange.[vi]
States will be permitted to allow businesses
with more than 100 employees to purchase
coverage in SHOP Exchanges beginning in
2017.
- Businesses who purchase coverage through the
Exchange will receive tax credits of up to 50%
of the employer contribution, if the employer
provides at least half of employees' premium
cost.
- Competition and participation in the
Exchange will drive down costs for small
business owners, who currently pay about 18%
more for health insurance coverage than large
employers.[vii]
The
new law will help contain
spiraling health care costs in
Maine.
- Incentives for purchasing private insurance
and expansions to public insurance will reduce
the number of uninsured Mainers; therefore,
reducing costs for everyone. When people
have access to lower costing preventive and
maintenance care more expensive emergency care
is often avoided. By insuring more people,
costs for those currently insured should go
down.[viii]
- The following measures will allow more
uninsured Mainers to gain access to the care
they need, which should lower the state's
uninsured rate:
-
Expanded Medicaid to cover more
low-income adults
-
Tax credits for individuals
who buy private insurance to help
offset unaffordable premiums.
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Dependents may remain on
their parents' insurance until age
26.
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Pre-existing conditions
exclusions prohibited by
2014.
- The new law will end price discrimination by
prohibiting insurers from charging more to
businesses with sicker workers or increasing
rates when someone gets sick or
injured.
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[i] Office of Speaker Nancy Pelosi,,
"Affordable Health Care for America: Small
Business Guide," Mar. 25, 2010
*Unless otherwise specified, information
about the new health care reform legislation may
be found in "Affordable Health Care for America,
H.R. 4872, The Health Care & Education
Affordability Reconciliation Act of 2010:
Implementation Timeline," U.S. House of
Representatives Committees on Ways & Means,
Energy & Commerce, and Education & Labor,
Mar. 18, 2010 and Kaiser Family Foundation, Focus
on Health Reform: Side by Side Comparison of Major
Health Care Reform Proposals, Mar. 22, 2010.
[ii] Maine Department of Labor,
2009.
[iii] USA, Health Coverage in Maine: How Will
Health Reform Help? Mar. 2010, p. 3.
Available at
http://www.familiesusa.org/assets/pdfs/health-reform/state-gains-2010/maine.pdf
Accessed Mar. 26, 2010.
[iv] Small Business Majority, "Healthcare
Reform Will Help Maine's Small Businesses, 2009";
"The Benefits of Health Care Reform In the 1st
Congressional District of Maine" and "The Benefits
of Health Care Reform In the 2nd Congressional
District of Maine," U.S. House of Representatives
Committee on Energy & Commerce, Mar.
2010.
[v] Ibid, p. 3.
[vi] Ibid, p. 2.
[vii] Small Business Majority, "What's In
Healthcare Reform for Small Business?" Mar. 26,
2010.
[viii] Ibid, p.
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