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Changes in Store on September 23 Will Help Small Businesses Offer Health Coverage


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By Jay Angoff, Director of the Office of Consumer Information and Insurance Oversight  

Like many small business owners, you probably want to provide health insurance for your employees. It’s one of the benefits that employees appreciate and value the most. And it’s a great way to retain good employees. Nobody wants to be wondering what will happen to them if they have a car crash or need surgery.

The good news is that the Affordable Care Act makes it easier for small businesses to cover their employees’ insurance needs right away. The law was passed in March and certain provisions go into effect this year. Starting this year, if you have up to 25 employees, pay average annual wages below $50,000, and provide health insurance, you may qualify for a small business tax credit of up to 35% to offset the cost of the insurance. That credit will increase to 50% for qualifying businesses in 2014.

The Affordable Care Act will also give you more control and flexibility in providing health coverage. Starting September 23, the law:

  • Prohibits most insurance companies from refusing coverage or limiting benefits of children (up to age 19) because of a pre-existing medical condition.
  • Prohibits all insurance companies from canceling your employees’ coverage because of an unintentional mistake on an application.
  • Prohibits all insurance companies from putting lifetime caps on the dollar amount that they will spend on benefits.
  • Limits insurance companies’ ability to impose unreasonable premium increases on consumers.

These provisions will be welcome changes for people who have children with conditions like diabetes or asthma, and anyone who has seen their premiums skyrocket over the last few years.

Another important provision for the small business community is young adult coverage---also starting on September 23, health plans that offer dependent coverage must make coverage available to up to age 26, allowing most young adults to stay on their parents’ plan. Plans are required to provide a 30-day period to allow young adults to enroll on their parents’ plan,no later than the first day of the plan’s next plan year. This will not only benefit the immediate families of small business owners with health insurance, but also their employees who may be able to access this coverage. 

More changes are in store between now and 2014 that will continue to benefit you. In 2011, for example, insurance companies will be required to spend at least 80% of your premium dollars on health care and quality improvements, instead of overhead or administrative expenses.

Check out the small business section of HealthCare.gov to learn more.

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