Salina, KS – Expanding health insurance coverage is one of the main goals of the Affordable Care Act. Most of the new health care law takes effect in 2014, but parts of it are in effect now. One such part is designed to make coverage available to a group of people who are among the most likely to be uninsured employees of small businesses.
It's no secret that health insurance premiums for businesses and their employees nationwide have been rising. According to a recent study by the Commonwealth Fund, premiums rose 41% from 2003 to 2009. In Kansas, the average premium for family coverage went from $9,000 to $12,000.
Those rising costs have hit small businesses especially hard, according to Ron Rowe. He's in charge of small group sales for BlueCross BlueShield of Kansas City.
"The small group market has always been in the last four or five years about affordability," Rowe says. "Small employers dropping coverage because they couldn't afford coverage."
Rowe says 70% of small employers offered insurance to their workers in 2000. By 2009, that figure was down to only 58%.
The Affordable Care Act offers a tax credit to those who pay at least half of the premium for their employees. This tax season, the credit will offset up to 35% of the premiums that small businesses paid last year.
Rowe launched a campaign to inform businesses about the tax credit the week after the law was passed.
"When we saw the tax credit that was in the bill, we said this is a big opportunity for us to tell these small employers who currently have coverage with us that it just got less expensive for them," says Rowe. "And those employers that are out there that haven't bought it because it's not been affordable, maybe it's affordable for them now. So we jumped on it right away."
More than 400 new small businesses eligible for the tax credit have signed up, including 150 who didn't previously offer insurance to their employees.
One of those is a small, school lunch contractor called Bistro Kids. In the busy dining hall at Oakhill Day School in Kansas City, Bistro Kids Operations Manager Merrill Gobetz says the tax credit made it financially viable to offer health, dental, and vision benefits.
"Our employees had been asking for it," says Gobetz. "And, you know, there can be injuries in the workforce when you're standing all day long and working around knives or commercial equipment. We felt like it was the right thing to do to kind of give back to them. Because any other job in the same industry, they wouldn't have benefits, and that kind of sets us apart, too."
The chef here at Oakhill recently had an impacted wisdom tooth. Gobetz says last year, she wouldn't have been able to afford a trip to the dentist or the medication she needed.
"She said when she went to the prescription counter they said 'that's $250.' She handed them her new insurance card and they said, 'oh, that's $10.' It was just amazing, and she was able to get the prescription. Otherwise, she probably wouldn't have," Gobetz says. "Little issues that normally they would just live with, now they can actually go seek medical attention. Which is how it should be without them worrying about, 'oh i can't feed my family or pay my rent this month because I had to go to the hospital instead."
The tax credit is tailor-made for businesses like Bistro Kids. To qualify, a business must have fewer than 25 full-time workers, and the average wages have to be below $50,000 a year. The closer a business gets to those limits, the smaller the tax credit.
One misconception about the Affordable Care Act is that it will require businesses to offer health coverage to their workers. John McDonough helped write the bill, as a staffer of the Senate committee that drafted one version.
There's nothing in the law that requires any employer to offer health insurance coverage," says McDonough. "The only provision in the law that gets into that would require a large employer with more than 50 workers to pay something when they have workers who can't get health insurance and end up going into one of the new state exchanges and getting publicly subsidized coverage."
The idea being to make sure that employers continue to help pay for health care one way or the other.
But the exchanges and that requirement don't begin until 2014. Meanwhile, small businesses eligible for the tax credit can claim it on their 2010 tax returns.
Ron Rowe, of BlueCross BlueShield of Kansas City, says the only complaint he's heard about the tax credit is that too few businesses qualify for it.
"This is the one thing in the health care bill that addressed affordability," Rowe says. "It doesn't really address the rising cost of health care, but it did address trying to make health care affordable for the small employer. And it's been popular."
And as word spreads about the tax credit, a growing number of small businesses and their workers may find the new tax credit provision in the law can help them afford health benefits.
IRS - Small Business Health Care Tax Credit
IRS FAQ - Small Business Health Care Tax Credit
IRS Guidance on Small Business Health Care Tax Credit
Commonwealth Fund - State Trends in Premiums and Deductibles
BlueCross BlueShield of Kansas City
Blue KC - Small Business Health Care Tax Credit
KHI News Service - Tax Credits Spur Coverage
Affordable Care Act
Healthcare.gov - small employers
Healthcare.gov - large employers
Kansas Insurance Department - small business
Kansas Small Business Tax Credit
Blue KC tax credit calculator