More than 16 million people are employed by small businesses that will be eligible for tax credits designed to offset health insurance premium costs starting next year, a new report finds.
The Congressional Budget Office, according to the report, estimates the tax credits could supply as much as $40 billion in support to small businesses over 10 years and reduce premiums 8 to 11 percent by 2016.
The report concludes that most of the erosion in employer health coverage in the past 10 years has occurred in small firms. Just 46 percent of businesses with fewer than 10 employees offer health benefits compared with companies with at least 200 employees (98 percent) and firms with at least 50 employees (52 percent).
“Because of high costs, many of them stopped offering health insurance or asked employees to pay larger percentages of premiums,” said Sara Collins, lead author and Commonwealth Fund vice president, in a statement. The Commonwealth Fund is a private foundation supporting independent research on health policy reform and a high performance health system.
“This new, regulated health insurance marketplace evens the playing field and gives small businesses comprehensive, affordable options for covering their workers.”
The law also will offer pre-existing condition-insurance plans and requires the Secretary of Health and Human Services and states to establish processes to review insurers’ premium increases, which will make insurers accountable for unreasonable hikes. Starting in 2011, the law will cap administrative costs to 20 percent of premiums.
Eligible employers can claim the credits on their tax returns starting next year and must pay at least 50 percent of their employees’ health insurance premiums, the report explains.
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