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3 Ways Healthcare Reform Can Affect Small Businesses

By Andrew Lu on June 25, 2012 | Last updated on March 21, 2019

A sweeping healthcare bill passed the House of Representatives last week and now awaits President Obama's approval.

The law potentially has a significant effect on the way small employers purchase and provide health insurance for themselves and their employees. 

Here are three things you need to know about healthcare reform law for employers, as reported by CNN Money.

  1. By 2014, states will be required to set up Small Business Health Options Programs ("SHOP Exchanges") where small businesses can pool together resources to buy insurance. As a larger unit, small businesses may be able to reap significant insurance savings with lower premiums. Until the SHOP Exchanges are set up, businesses with ten or fewer employees earning less than $25,000 a year will be eligible for a tax credit of 35% of health insurance costs.

  2. Insurers will no longer be able to consider pre-existing conditions in setting rates or determining eligibility for insurance. There will also be a ban on lifetime limits on coverage. These rules insure that more people are covered and are covered when they really need insurance.

  3. Businesses with more than 50 employees will be required to either offer healthcare coverage or pay a penalty of $750 a year per full-time worker, starting in 2014. And businesses cannot just offer any coverage. The coverage must meet minimum standards.

The new healthcare reform law will impact employers. If passed in its current form, small businesses may find it easier to shop for affordable insurance at SHOP exchanges. And when looking for the right insurer, small businesses and their employees should know that the law will require health insurance companies to be more liberal with their coverage. Employers who fail to provide insurance to their employees could be penalized.

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