Your Bo'om Line: What Health Reform Means For Illinois Small Businesses

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1 Your Bo'om Line: What Health Reform Means For Illinois Small Businesses Jessica Stone and Rhett Buttle, Small Business Majority Jim Duffett, Campaign for Better Health Care Lina Choudhry Rashid, U.S. Department of Health and Human Services

2 About Small Business Majority Public policy advocacy organization founded and run by small business owners National based in California offices in Sacramento, Washington, DC and New York Research and advocacy on issues of top importance to small businesses (<100 employees) and the self-employed Very focused on healthcare over the past 3 years top issue in all of our research

3 The Campaign for Better Health Care is a coalition of organizations and individuals, working to help create and advocate for an accessible, quality health care system that provides for all. We believe that accessible, affordable, quality health care is a basic human right for ALL people.

4 Small businesses struggling with costs " Soaring cost of health insurance especially for small businesses 54% of businesses <10 employees don t offer (Kaiser study) " 28% self-employed: not covered " Small firms pay 18% more than large businesses Our national study: Small business health costs will more than double over the next 10 years $2.4 trillion total

5 Small businesses struggling with costs Our opinion surveys: 86% of small businesses don t offer because of cost; 72% of those who do offer say they are struggling to do so

6 Key benefits of health reform for small businesses Establishes a competitive marketplace for small businesses and the self-employed Provides immediate tax credits for most small businesses ($40 billion in credits by 2019) Provides immediate access to a Preexisting Condition Insurance Plan for the selfemployed

7 State Health Insurance Exchanges: Coming in 2014 Large marketplace to shop for health coverage o Purchasing pool to increase buying power and reduce administrative costs o Small businesses with fewer than 100 workers eligible Private insurance plans will compete o Improved competition will increase employer choice o Exchange will negotiate with insurers on behalf of small businesses to ensure higher quality and lower costs RAND Study o Exchanges will expand coverage to 85.9% of small business employees, up from 60.4% today, an increase of 10.5 million workers

8 State Health Insurance Exchange One-stop shop web portal Small Business Exchange INSURANCE PLANS EXCHANGE Choice Comparison Billing Tax Credits o Compare plans and get detailed information about price, quality and service o Plans organized by category: bronze, silver, gold, platinum o Streamlined billing process SMALL BUSINESSES

9 State Insurance Exchange: Other Benefits Many small business workers and self-employed entrepreneurs will receive affordability tax credits towards their premiums o Up to 400% of federal poverty level (approx. $90,000 for a family of four) Ensure that more $$ go to medical care reduced administrative costs Other incentives for administrative efficiency and modernization Expanded coverage and individual responsibility requirement reduce hidden tax

10 State insurance exchange: Other Benefits States determine whether to keep the individual and small group markets separate or merge them Insurance will still be sold outside exchange Members of Congress must use the exchange

11 Shared responsibility Businesses with fewer than 50 workers 96% of all businesses are exempt from any requirement to offer insurance

12 Exchange key issues Active vs. passive (can the exchange negotiate?) Regional exchanges Role of brokers Expanding exchange to large firms in 2017 Incorporation of wellness and prevention programs Administrative issues: billing, payment, web, etc. Effective education and outreach

13 Accessible Insurance plans must have a range of costs to ensure affordability. Include provisions to help small businesses and their employees understand how to enroll, compare plans, and obtain personal assistance, as through a toll free hotline. Is easy for small businesses, employees and providers to use and reduces paperwork

14 Quality Must be a choice of several plans with different benefit levels. Small business must be represented on the Illinois Marketplace Governing Board, along with a diverse mix of expertise related to health care. The Governing Board must be independent Ensure ethnic, racial and cultural diversity in the membership Governing Board.

15 Contains Costs Must have the same rules for plans inside and outside of the competitive marketplace to ensure that risk sharing is fair for all. Governing Board and all procedures must be created to protect against Conflicts of Interest Transparency and consumer interests are fully integrated into the insurance marketplace, such as with a Small Business and Consumer Advisory Committee to the Governing Board.

16 Small business tax credits Available to small employers (businesses or taxexempt) through new Form 8941, available on Takes effect immediately (tax year 2010) Which businesses are eligible? Fewer than 25 full-time employees Average annual wages <$50,000 Employer pays at least 50% of the premium cost

17 Small business tax credits Our report: More than 159,900 Illinois small businesses are eligible (76% of all IL businesses); 48,400 businesses eligible for the maximum credit Illinois Small Businesses Eligible for Premium Tax Credits in 2010 Non-eligible IL businesses Eligible IL businesses 21% 76% 24% 55% Maximum Premium Tax Credits Some Tax Credits

18 Small business tax credits Tax credits on a sliding scale: o Up to 35% of premium expenses for o Up to 50% of premium expenses for any two years beginning 2014 Tax credits do not cover premium expenses of owners or their families Tax credits can not be claimed by the selfemployed Still available for those who filled extensions or as a correction to your 2010 taxes

19 Preexisting Condition Insurance Plan (formerly high-risk pools) Available to individuals -- incl. self-employed Takes effect immediately Eligibility: People who have been uninsured for six months and have been denied for a preexisting condition Plans = lower premiums due to federal funding ($5 billion over 5 years) Available until full implementation in 2014 (no gap in coverage)

20 Other immediate benefits Grants for up to 5 years to small employers that establish wellness programs (2011) Simple cafeteria plan for small (<100) employers to offer tax-free benefits (2011) New innovations to bring down costs (2011) Increased access to care - community health centers (2011)

21 Next steps Implementation mostly left up to states essential to have small business input Repeal is unlikely many provisions popular However, Congress is open to improving the law o e.g reporting requirement has been repealed Law is not perfect, but small business owners can engage with policymakers to make it successful

22 Resources National HHS website: Our website: o Webinars for your group! o Detailed FAQ o Tax credit calculator o Follow us on Twitter and Facebook! Contact us for more information. Phone: (866) jstone@smallbusinessmajority.org

23 RESOURCES Small Business Web page: Illinois Legislation: Competitive Market Place- Senate Bill 1729 : Insurance Rate Review- House Bill 1501: Your Guide to Health Reform: