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Health help for small businesses

By Jay MacDonald · Bankrate.com
Tuesday, September 14, 2010
Posted: 7 am ET

"I'm from the government and I'm here to help you." America's small businesses have heard that song so often that when a rare government program does happen along that actually puts money in their pocket, such as the health insurance reforms mandated by the Patient Protection and Affordable Care Act (ACA), they are understandably skeptical.

A new white paper by the Commonwealth Fund says that small businesses will be among the first to see the benefits of the ACA, in the form of tax credits to offset their health insurance premium costs.

According to Sara Collins, co-author of "Realizing the Potential of Health Reform: Small Businesses and the Affordable Care Act of 2010," small businesses under 50 employees pay up to 18 percent more in premiums than larger employers for comparable health insurance policies, mostly due to greater per-employee administrative and underwriting costs.

As a result, small businesses are less likely to offer health insurance to their employees. According to the report, fewer than half of companies with 10 employees or less offer health insurance while 98 percent of companies with 200 or more employees do. If your employer does not offer health coverage, you can compare health plans at Bankrate.com.

The ACA tax credits are designed to make health insurance more affordable for small businesses, but the incentives don’t stop there. The ACA also places new limits on how much insurers can spend on administrative costs,  puts new processes in place to review premium increases and establishes new preexisting condition health insurance plans.

By 2014, small businesses also will be able to purchase coverage through the new state-based health insurance exchanges and take advantage of their economies of scale.

Question for small business owners: Do you think the incentives in the ACA will enable you to offer (or cut the costs of) a health insurance program for your employees?

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