Small Business and Health Insurance..

By: Taylor

When it comes to Health Insurance, a small business is generally considered to be one which has fifty or less employees, however some states consider those who are self-employed with no employees a small business. There are a number of options available to small business owners when it comes to group health insurance. There are also tax credits – which will lower the cost of health insurance and make it more affordable for employers to provide health insurance to their employees.

Small Business and Our Economy

Small businesses play a key role in both the American economy and in job growth. With our current health care system, small business owners find themselves severely disadvantaged when compared to their larger counterparts. The Council of Economic Advisors examined the small business challenge under the current health care system as well as the impacts of health care reform on the small business and their employees. The following are their findings:

Small Business is Crucial:
In 2006, Small businesses having less than 20 employees accounted for 18% of private sector jobs, yet account for nearly 25% of employment growth between the years 1992 to 2005.
Start-up small businesses account for a large majority of jobs.
The Current Health Care System Does Not Work for Small Businesses:
Small businesses pay up to eighteen percent more, per worker, than their larger counterparts do for the same health insurance policy. Many times, these higher insurance costs causes wages to be lower, or the employer is forced to allow the higher costs to cut into their operating funds. Funds which could otherwise be used for marketing, research and development or much needed investments.
The higher costs of health insurance, for small businesses, make it far less likely for them to offer a health insurance benefit to their employees. In 2008, only 49% of small businesses with 3-9 employees and 78% of small businesses with 10-24 employees offered any type of health insurance. By comparison, 99% of the companies with 200+ employees offered health insurance.
The number of small businesses offering health insurance to their employees is diminishing at an alarming rate. Between the years 2002 to 2008 small businesses, with 3-9 employees, offering health insurance declined from 58% to 49%.
Health Care Reform will Reduce the Burdens on Small Business:
Small businesses will be able to purchase health insurance through an insurance exchange. This will allow them to compare and contrast between different providers and find insurance coverage at a lower price than they had been able to through the current small group market.
Many small businesses, who provide health insurance to their employees, will receive a small business tax credit to ease their disproportionately higher costs and encourage insurance coverage. This tax credit will be targeted to small businesses with wages below a certain criteria.
The Insurance Exchange will provide more options for employees of small business that do not offer health insurance.
Entrepreneurial activity would grow through the increase in incentives for American’s to start their own businesses. Will increase the availability of workers willing to work at smaller firms, and if health care reform is successful, more workers will be willing to leave their current jobs – where they currently have insurance – for a new position at a small business which also offers health insurance.
With more small businesses having the ability to affordably offer insurance benefits to their employees, worker absenteeism will decrease, increasing productivity and thereby strengthen the private sector, small business workplace.

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