Affordable Health Insurance for California’s Small Businesses and Workers

PRESS OFFICE/LOS ANGELES

Date:  May 2, 2013

Internet Address: http://www.sba.gov/news

Affordable Health Insurance for California’s Small Businesses and Workers

70.1% of Small Businesses in California

are Eligible for Health Care Tax Credits

U.S. Health and Human Services Region IX Regional Director Herb K. Schultz

U.S. Small Business Administration Regional Administrator Elizabeth Echols

For years, we had a health insurance market that was broken for small businesses. 
Because they had less bargaining power, small businesses paid an average of 18% more
for the same health insurance plan offered to the bigger business down the street,
and their premiums could skyrocket if a single employee got sick.

But because of the Affordable Care Act, California’s small businesses and their
employees are getting better choices, starting with new protections that limit the
outrageous rate hikes many small business owners faced in the past.

Beginning in 2014, California’s small business owners will have access to a new
Health Insurance Marketplace, Connect for Health California—which opens for
enrollment on October 1st—that will allow them to make side-by-side comparisons to
find a plan that fits their budget and that’s right for their businesses and
employees.

Small businesses are also seeing savings thanks to new tax credits available to help
them cover their employees. Many small businesses with 25 or fewer employees have
already received a tax credit of up to 35% of their health insurance costs. And
beginning in 2014, this tax credit will go up to 50%. According to the Small
Business Majority 375,310 small businesses in California which employ 2,442,900
people will be eligible for an average credit of $752 per worker.

That’s just one of the ways the law is bringing down costs for small business
owners.  Insurance companies must also now publicly justify every rate increase of
10% or more, which has led to a sharp decline in double-digit rate hikes.

Additional rules require insurers to spend at least 80% of small employer premium
dollars on employees’ actual health benefits, instead of the insurer’s own
administrative costs.  These limits have already resulted in more than $1 billion
being returned to small business owners and other consumers.

Small businesses are the backbone of our communities. And in an economy where small
businesses create two-thirds of jobs, owners and employers deserve a health
insurance market with fairer prices, better choices and greater certainty.

Businesses with fewer than 50 employees – that’s 96% of small businesses – are not
required to purchase insurance.  Of the remaining 4% of small businesses with more
than 50 employees, most already provide insurance.  So the number of businesses that
will have to begin offering employee health insurance or pay a penalty is minimal.

No business owner wants to drop coverage for their employees.  For many, their
employees are like a family.  For others, offering health insurance is critical to
attracting the kind of workers they need to succeed.

By making the health insurance market work better for California’s small businesses,
the law is letting them focus on what they do best: delivering great products and
services, creating jobs, and growing our economy.

To receive information and sign up for updates, California small business owners can
visit www.healthcare.gov.


Contact:  Patrick Rodriguez (818) 552-3222

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