By 2014, states must set up Small Business Health Options Programs – aka "SHOP Exchanges" – essentially purchasing pools where small businesses can club together to buy insurance. What's defined as a "small business"? Those with no more than 100 employees, though states can limit the pools to companies with 50 or fewer employees through 2016. Companies that outgrow the size limit will be grandfathered in.
The pools will probably only slightly shrink your insurance costs: The nonpartisan Congressional Budget Office predicts small-group premiums will fall by 1 to 4 percent thanks to the exchanges. (Unfortunately, the premiums may rise considerably before they fall. Health care insurance consultant Robert Laszewski told the Wall Street Journal that plans will want to make as much money as possible before the wide-sweeping reforms take effect in 2014.)
Companies with fewer than 50 workers won't face penalties if they don't offer insurance. If you have 25 or fewer employees and a work force with an average pay of up to $40,000, you can get tax credits to help buy insurance: up to 35 percent of the cost of the premiums this year, rising to 50 percent in 2014. (You'll have to pay at least half of the total premium cost or 50 percent of a benchmark premium to qualify.) Full credits will be available for the smallest firms with the lowest-paid workers (10 or fewer employees and average yearly wages of less than $25,000); the subsidies shrink as companies' size and average pay rise. The tax breaks – estimated to affect about 12 percent of employees covered by small-group insurance -- will last for the first two years a company buys insurance through its state exchange. The breaks should lower the cost of insuring affected employees by 8 to 11 percent, estimates the Congressional Budget Office.
If you provide health insurance coverage to retirees age 55 to 64 who aren't eligible for Medicare, the legislation includes what's being called a "temporary reinsurance program" that begins no later than 90 days from the moment Obama signs the bill and expires Jan. 1, 2014. The program will reimburse employers or insurers for 80 percent of retiree claims between $15,000 and $90,000.
Companies with more than 50 employees that don't offer coverage would be fined up to $750 per worker if any employees rely on government subsidies to buy coverage. The compromise bill the Senate will consider this week will hike the fine to $2,000 per full-time employee. The first 30 workers are excluded, but two part-time employees will count as one full-time one for purposes of penalty calculation.
