For years, we had a health insurance market that was broken for small businesses. Because they had less bargaining power, small businesses paid on average 18 percent more for the same health insurance plans offered to bigger businesses down the street, and their premiums could skyrocket if a single employee got sick.
Thanks to the Affordable Care Act, small businesses and their employees in Colorado soon will enjoy more and better choices, starting with new protections that limit the rate hikes many small business owners faced in the past.
Beginning in 2014, small business owners in Colorado will have access to Connect for Health Colorado, a new health insurance marketplace. The exchange, which opens for enrollment Oct. 1, will allow small business owners to make side-by-side comparisons to find a health insurance plan that fits their budgets and that’s right for their businesses and employees.
Small businesses are also seeing savings thanks to new tax credits available to help them cover their employees. Many small businesses with 25 or fewer employees have already received a tax credit of up to 35 percent of their health insurance costs. Beginning in 2014, this tax credit will go up to 50 percent.
According to the Small Business Majority, 70,360 small businesses in Colorado that employ a total of 335,400 people will be eligible for an average credit of $790 per worker.
That’s just one of the ways the law is bringing down costs for small business owners. Insurance companies must also now publicly justify every rate increase of 10 percent or more, which has led to a sharp decline in double-digit rate hikes.
Additional rules require insurers to spend at least 80 percent of small employer premium dollars on employees’ actual health benefits instead of the insurer’s own administrative costs. These limits have already resulted in more than $1 billion being returned to small business owners and other consumers.
Small businesses are the backbone of our communities. In an economy in which small businesses create two-thirds of jobs, owners and employers deserve a health insurance market with fairer prices, better choices and greater certainty.
Businesses with fewer than 50 employees — that’s 96 percent of small businesses — aren’t required to purchase insurance. Of the remaining 4 percent of small businesses with more than 50 employees, most already provide insurance. So the number of businesses that will have to begin offering employee health insurance or pay a penalty is minimal.
No business owner wants to drop coverage for their employees. For many, their employees are like a family. For others, offering health insurance is critical to attracting the kind of workers they need to succeed.
By making the health insurance market work better for small businesses in Colorado, the federal health care reform law is letting them focus on what they do best: delivering great products and services, creating jobs and growing our economy.
To receive information and sign up for updates, Colorado small business owners should visit the website at www.healthcare.gov.
Marguerite Salazar is the U.S. Health and Human Services Regional VIII administrator. Stan Nakano is the U.S. Small Business Administration acting regional administrator.