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Health Care Reform Law: What’s in it for Small Businesses?

Here is what the new health care reform law will do to help the small business segment of U.S. economy, write Robert Phillips and Sara Collins.

In California, small businesses, or businesses that employ less than 100 people, make up over 90% over all private sector employers, employ over 5 million Californians, and paid over a third of the state’s private sector payrolls. Nationally, small businesses employ over 50 percent of all private sector workers in the U.S. and have generated two thirds of the new jobs in our economy during the recession.

Robert Phillips of The California Endowment and Sara Collins of the Commonwealth Fund, both private foundation headquartered in California and New York respectively who focus on health policy answers concerns raised by small business owners in California.

I own a sandwich shop in San Francisco with five full-time employees. Will the new health care law require me to provide them insurance? If it does, I may be forced to shut down - Son ka Wu, Vietnamese entrepreneur

A: The new law doesn’t make it mandatory for small businesses with 50 employees or fewer to provide coverage.

I run BBQ business in Orange County with 13 full-time employees. My insurance cost has risen from 5 to 6 percent of my overall expenses to more than 12 percent, in the past four years. Soon I’ll have to opt out of providing health insurance. Can’t the new law help me lower my health insurance costs? – Liz Parker.

A: Two provisions help reduce premiums. First, if you have fewer than 25 employees who earn an average wage below $50,000 per annum you are eligible for a tax credit of up to 35 per cent of the amount you contribute for employees’ premiums, for taxes filed for 2010 to 2013. From 2014 to 2016, the tax credits will increase to cover up to 50 percent of the employer’s premium contribution for eligible small businesses.

Second, the health law requires states to create insurance exchanges which will give small businesses more options and clout in purchasing insurance. The state exchange in California will allow small businesses to band together to purchase insurance, giving them the type of clout that large businesses enjoy when negotiating for coverage. In California, 3.76 million small-business employees and their dependents, and 840,000 self-employed people, will be eligible to purchase insurance through the exchange.

I am a Korean-American entrepreneur operating a small travel agency in San Jose. I have seven employees. One was diagnosed with liver cancer but our insurance provider has stipulated a limit on the cost that it will bear. What are the alternative options that I have? Can the new health care law help me? -- Lianna Kim

A: The health care law outlaws denial of insurance to those with pre-existing conditions. But this change won’t take full effect until 2014. But U.S. citizens and legal immigrants who have preexisting conditions and have been uninsured for at least six months will be eligible to enroll in the new Pre-existing Condition Insurance Plan (PCIP) being offered through California’s Medical Risk Medical Insurance Board (MRMIB). Maximum out-of-pocket cost sharing for enrollees will be $5,950 for individuals and $11,900 for families, per year.

As of September 23rd, the law prohibits all health plans from imposing lifetime dollar limits on benefit payments. This provision applies to both old and new insurance plans. For people who have exceeded their lifetime limits before September 23, the plans must provide notice that the lifetime limit no longer applies, and provide an enrollment period for those who have disenrolled from the health plan.

I am a Latino entrepreneur running a Mexican restaraunt in San Jose with 10 employees. I don’t have the time and expertise to figure out the most affordable and appropriate insurance cover for my employees. Does the new law simplify the insurance purchacing process? - Jose Rios

A: California is required to create new health insurance exchanges for small businesses like yours and for individuals starting in 2014. This aims to make it simpler for individuals and small businesses to compare different policies by making it mandatory for participating insurers to meet a set of federal essential benefit standards. All plans will have no lifetime or annual limits on what insurers will pay, and must limit out-of-pocket costs to $5,950 for a single person and $11,900 for a family. Deductibles for small businesses can be no greater than $2,000 for a single policy or $4,000 for a family policy.

If you have any questions about the health care reforms to ask the expert Call: (800) 871-9012 ext. 712389# Email: asktheexpert@newamericamedia.org or Regular mail: P.O. Box 410447, San Francisco CA 94141-0447 calendow.org/healthlaw or GetCoveredCA.org


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