Sunday, December 17

Health Insurance In Texas Is Not Just For Big Companies Any More

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Why Offer Tax Credits To Small Businesses?

On average, these small firms must spend about 18 percent more than large companies to offer their employees the same health insurance in Texas. That means employees working within small companies are much less likely to have access to health care because wages can’t keep up with the cost of insurance. These premiums rose three times faster than wages in the last decade.

Small businesses contribute approximately 70 percent of all new jobs in Texas. In spite of the recession, Texas actually gained small businesses in 2008, according to the U.S. Small Business Administration Office of Advocacy. The number of self-employed people in Texas rose from 1.1 million by nearly two percent while the national number of self-employed fell by two percent to 15.9 million.

With stronger economic growth than in most areas of the U.S., growth in Texas remains highly entrepreneurial. The Dallas-Fort Worth area has shown one of the highest rates for new businesses in the nation.

What Does Health Care Reform Offer Small Businesses?

In 2010, the Affordable Care Act implements tax credits meant to offset the rising cost of health insurance premiums as an incentive for small businesses to add health insurance coverage for their employees. While 98 percent of big firms already include insurance among their benefits, only about 46 percent of the companies that employee less than 10 people offer employees health insurance. Even businesses with up to 50 employees only insure about half of their employees. That leaves about 52 percent of these workers without adequate health coverage.

By 2013, 3.4 million employees stand to benefit as their employers become eligible for these tax credits, which will increase the following year. In 2014, the tax credits grow from 35 to 50 percent of an employer’s premium contribution. That could mean up to $40 billion of support for small businesses in the coming decade.

Which Small Business Will Qualify For Tax Credits?

To be eligible, small business employers must pay for at least half of their employees’ premiums. The actual amount of the tax credit will depend on the size of the company and the amount of the average wage paid by the firm. Tax credits are just phase one of the help coming for Texans who don’t have adequate insurance coverage.

Small businesses will have the option to insure employees via a state exchange in 2014. The exchange can lower premium costs because medical bills incurred by members can be offset with premiums collected from healthy members who incur no medical bills.

The exchange must offer plans with comprehensive benefits, and no insurers will be allowed to discriminate against those who are sick by denying them coverage in 2014. The deductibles for the plans for small businesses will be limited to $2,000 or less for individuals and to $4,000 or less for families.

What If You Don’t Receive Texas Health Insurance Through Employment?

People who don’t get health insurance in Texas through their employers will be able to buy from the Texas exchange. These Texas insurance plans will limit an individual’s out-of-pocket costs to $5,950. Family plans will restrict the maximum out-of-pocket expenses to $11,900.

Beginning in 2010, insurers must report how much of the premiums they collect are being spent on health care for the people paying the premiums. In the following year, plans for individual and small businesses must keep administrative costs down to 20 percent or less of the total premiums collected. If they exceed that limit, insurers will have to give rebates to those they insure.

Federal and state governments will also be empowered to approve premium rate increases to prevent insurers from needlessly hiking rates for greater profit. These health care reform measures are designed to protect thousands more Americans with access to adequate health care for the time in our country.

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