Why Small Businesses Will Benefit by Offering Health Insurance to Employees
Texas CEO Magazine
“50 = The Magic Number”
Oct. 26, 2012
The provisions of the Affordable Care Act (ACA) that will take effect in 2014 will make it possible for small businesses to provide health insurance for employees without bearing a large cost premium for their small size, noted Kristie Loescher, senior lecturer of management at McCombs, in an article she recently contributed to Texas CEO Magazine.
Here is an excerpt from the article that outlining Loescher’s recommendations for smaller businesses:
While small businesses with fewer than 50 employees will not be required by the ACA to offer health insurance, there are several reasons why small business CEOs should consider it:
Competition for talent. Since almost all larger companies offer health insurance benefits, small companies who do not are at a disadvantage when recruiting and retaining talented workers.
Affordability. Before 2014, small businesses were at a distinct price disadvantage and paid higher premiums for health insurance than large companies. With the ACA setting “community-based rates,” small businesses will have access to more options and cheaper insurance than they could purchase on their own in the past.
Opportunities for tax credits. As of the 2010 tax year, small businesses with less than 26 employees can claim a tax credit of up to 35 percent of premium costs. In 2014 this credit will go up to a maximum of 50 percent and can be used for two years. The Congressional Budget Office estimates that this tax credit will save small businesses a total of $40 billion by 2019.
Long-term productivity improvement. Employees of companies that do not offer health insurance tend to be uninsured. Even with the ACA’s 2014 individual mandate, employees may not be able to afford anything but minimal coverage on their own. With the help of their employer, employees can access higher levels of health insurance with lower out-of-pocket expenses, which will encourage the use of preventive services, leading to happier, healthier, and more productive employees and families.
For more information about the impact of ACA on small businesses, read the full article on Texas CEO Magazine.