HOW SMALL BUSINESS OWNERS OBTAIN HEALTH COVERAGE
In 2012, the Kaiser Family Foundation released an Employer Health Benefits Survey and found that small businesses are significantly less likely than larger businesses to offer health benefits to their employees. Only 50% of small businesses with 3-9 employees offered health benefits compared with 98% of firms with 200+ employees. Employees of small businesses where health benefits are not offered, rely on employer-based insurance through a family member or by obtaining health insurance in the individual market. So, what should business owners do?
The following shows how small business owners with 1-24 employees got health insurance in 2011:
Approximately 25% of small business owners were uninsured.
Approximately 30% of small business owners get health insurance on the individual market.
Approximately 40% of small business owners get employment-based insurance, either from their own job or through a family member.
What Health Insurance Reform Means for Small Business Owners
Because the majority small businesses (about 55%) get health insurance on the individual market or go uninsured, the biggest effects that health care reform has on small business owners will likely be the changes in the individual insurance market (not the changes in the small business market). Specifically, the following changes to the individual market will impact the majority of small business owners:
Guaranteed issue & removal of rate-ups in price for pre-existing health conditions.
3-1 limit on how much premiums can vary by age.
Requirement that all insurers cover a standard set of essential health benefits.
Requirement to purchase health insurance or pay a tax penalty.
Availability of premium tax credits for individuals/families making less than 400% of the Federal Poverty level without affordable employer sponsored coverage.
According to the Kaiser Family Foundation, an estimated 60% of small business owners who are now buying insurance in the individual market have incomes less than 400% of the Federal Poverty Level and would be eligible for the new tax credits in 2014. Additionally, 83% of the owners who are now uninsured would be eligible for the new tax credits in 2014.