small business
Healthcare RX
Healthcare tips
for small biz
Small firms face
uncharted landscape
By Brian O’Connell
TALKING FINANCES with a small-business
owner these days without mentioning healthcare reform is like talking great gorilla movies
without mentioning King Kong.
No doubt, healthcare reform is a hot
potato for entrepreneurs, with some on board
and some against it.
“Healthcare reform does a lot to help
small businesses, including ending insurance
discrimination and allowing us to band
together to shop for coverage with real bargaining power,” says Tammy Rostov, owner of
Rostov’s Coffee & Tea in Richmond, Virginia.
But Dan Danner, president and CEO of
the Washington, D.C.–based National
Federation of Independent Businesses,
doesn’t see it that way. “Small-business own-
Pros and cons
So what can small-business owners actually expect to see when healthcare reform
officially kicks off in 2014?
Primarily, they get access to a new health-
care model that should ease pricing con-
cerns and raise coverage levels. By
2014, all 50 states will have to estab-
lish Small Business Health Options
Programs (SHOP) exchanges.
Through these exchanges, small
companies can pool together
to purchase health insur-
ance for employees.
According to figures
from the Congressional
Budget Office (CBO),
small businesses should
save between 1 to 4 per-
cent in the exchanges,
with coverage rates
estimated to rise
by 3 percent.
Until 2014,
small businesses
with fewer than 10
employees can earn
a tax credit of up to
35 percent of the cost
of health insurance.
a n
2014, all 50 states will have to estab-
r
er y
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with coverage rates
ie
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i
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e
a tax credit of up to
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LISA TSOU, OWNER OF MyHealthCafe.
com, a nonpartisan website dedicated
to helping consumers understand their
healthcare, and a Costco member, offers
small-business owners a few helpful
tips on leveraging the new healthcare
reform rules.
• 50 is the magic number. If you’re
a small business with 45 employees,
you probably want to be very conscious
of not inadvertently tripping over that
50-employee line into being required
to buy health insurance.
• To get the tax credit, you have
to be able to afford to buy health insurance. If you’re looking forward to the
small-business health-insurance tax
credit, remember it’s only a tax credit.
If you don’t have the cash to buy health
insurance for your employees in the first
place, it’s not going to help you.
• Family members do not count
toward the tax credit. Any family member of a business owner or a business
owner’s partner cannot be counted in
the calculation of small-business health-insurance tax credits. More important,
a family member’s hours, wages and
health-insurance premiums cannot be
counted in the tax-credit calculation,
so a small business that mainly employs
family members will likely receive only
a small fraction of the tax credits it
would receive if it employed mainly
non-family members.—BO
MEDIA BAKERY
ers everywhere are rightfully concerned that
the unconstitutional new mandates, countless
rules and new taxes in the healthcare law will
devastate their businesses and their ability to
create jobs,” he says.
The stakes are high. According to government statistics, small companies with
fewer than 50 employees account for about
31 percent of all private-sector jobs, and are
a key driver of employment growth.
Currently, there are close to 25,000 small
businesses in the United States, according to
government data.
Small firms also typically pay more for
health insurance than larger employers—
about 18 percent more, according to data
from HealthReform.gov.
OCTOBER 2010 ;e Costco Connection 23
Companies with 11 to 50 employees can earn a
partial tax credit. The tax credits will remain in
place during the first two years that small companies participate in SHOP exchanges. The tax
credit, combined with the purchasing power of
the exchanges, could drive insurance costs
down by 11 percent, the CBO reported.
Some say that those government figures
are of the rose-colored-glasses variety. “Small
businesses, like all businesses, are scratching
their heads to figure out how to play the new
federal legislation,” says John B. Torinus Jr.,
chairman and general manager of Wisconsin-based Serigraph Inc., who outlines his firm’s
experiences in the book The Company That
Solved Health Care (BenBella Books, 2010).
“Companies with fewer than 50 employees
can file for the law’s new subsidies, but that
