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Health Care Reform’s Effect on Small Businesses

Health Care Reform’s Effect on Small Businesses. SOUTH DAKOTA RETAILERS ASSOCIATION. Presented by: Christopher E. Hoyme Jackson Lewis, LLP 10050 Regency Circle, Suite 400 Omaha, NE 68114 (402) 391-1991 HoymeC@jacksonlewis.com www.jacksonlewis.com. HEALTH CARE REFORM.

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Health Care Reform’s Effect on Small Businesses

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  1. Health Care Reform’s Effecton Small Businesses SOUTH DAKOTA RETAILERS ASSOCIATION Presented by: Christopher E. Hoyme Jackson Lewis, LLP 10050 Regency Circle, Suite 400 Omaha, NE 68114 (402) 391-1991 HoymeC@jacksonlewis.com www.jacksonlewis.com

  2. HEALTH CARE REFORM • Building on a year's work from the House and the Senate, President Barack Obama signed the new the health care reform bill into law on March 23, 2010. • The provisions set forth in the new health care reform bill have been changed numerous times, and the final version of the health care reform legislation is still subject to interpretation and modification in the months and years ahead. • This presentation will highlight the goals of the health care reform, along with its immediate impact on small businesses such as those comprising the South Dakota Retailers Association.

  3. HIGHLIGHTS OF THE NEW HEALTH CARE REFORM According to the Obama Administration, the new health care reform legislation will result in the following positive developments: • It makes insurance more affordable by providing the largest middle class tax cut for health care in history, reducing premium costs for tens of millions of families and small business owners who are priced out of coverage today.  • It sets up a new competitive health insurance market giving millions of Americans the same choices of insurance that members of Congress will have.   • It brings greater accountability to health care by laying out common sense rules of the road to keep premiums down and prevent insurance industry abuses and denial of care.   • It will end discrimination against Americans with pre-existing conditions. • It puts our budget and economy on a more stable path by reducing the deficit by more than $100 billion over the next ten years – and more than $1 trillion over the second decade – by cutting government overspending and reining in waste, fraud and abuse.

  4. Does The Health Reform Require Me To Provide Insurance? NO • The new law will not require you to provide insurance. However, it will provide tax credits if you do decide to provide insurance to your employees.

  5. South Dakota • Small businesses make up 79 % of South Dakota’s businesses, but only 35% of those small businesses offered health coverage benefits in 2008. • 16,400 small businesses in South Dakota could be helped by a small business tax credit proposal that makes premiums more affordable.

  6. Six Ways Health Reform Will Help Small Businesses • Establishes A Health Care Tax Credit For Small Businesses • Tax credit immediately covers up to 35% of health care premiums for small businesses. • In 2014, the rate will increase up to 50%.

  7. When Is The Tax Credit Available? IMMEDIATELY! • Small businesses that currently provide health care for their workers will get immediate help with their premium costs. • In addition, any business that initiates coverage this year will also get a tax cut.

  8. Is Our Business Eligible For Tax Credit? • To qualify, businesses must have less than the equivalent of 25 full-time workers (e.g., a firm with fewer than 50 half-time workers would be eligible). • Qualifying firms must pay their employees, on average, less than $50,000. • For example: If you have 10 full-time workers, your total wages must be less than $500,000. • Qualifying firms also must cover at least 50% of the cost of the health care coverage for their workers.

  9. How Much Credit Can We Expect? • For-profit businesses can receive a credit of up to 35% of their premium costs. • On January 1, 2014, this rate increases to 50%. • Non-profit, tax-exempt organizations are eligible for a 25% tax credit now, and up to a 35% credit beginning in 2014.

  10. Example Of Hypothetical Savings • Main Street Mechanic—Auto Repair Shop • 10 Employees • Wages $250,000 or $25,000 per worker • Employer Health Care Costs: $70,000 • 2010 Tax Credit: $24,500 (35% Credit) • 2014 Tax Credit: $40,000 (50% Credit)

  11. Example Of Hypothetical Savings (2) Downtown Diner--Restaurant • 40 half-time employees (equivalent to 20 full-time) • Wages $500,000 or $25,000 per full-time equivalent worker • Employer Health Care Costs: $240,000 • 2010 Tax Credit: $28,000 (35% Credit) • 2014 Tax Credit: $50,000 (50% Credit)

  12. How Is The Size Of The Credit Determined? • The size of the credit depends on your average wages and the number of employees you have. • The full credit is available to firms with average wages below $25,000 and less than 10 full-time equivalent workers. • The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.

  13. Six Ways Health Reform Will Help Small Businesses (2) Creates Health Insurance Exchanges To Increase Bargaining Power and Reduce Administrative Costs • Health Insurance Exchanges will provide more choice, lower prices, and greater bargaining power for firms with up to 100 employers. • Starting in 2014, firms with 100 or fewer workers will be able to pool their buying power and reduce administrative costs by purchasing through an exchange.

  14. Six Ways Health Reform Will Help Small Businesses (3) Ends Price Discrimination Against Small Businesses With Sick Workers • Currently, small business with just one sick worker can face significantly higher premiums. • Health Reform will end this price discrimination. • Starting in 2014, “community rating” rules will prohibit insurers from charging more to cover small business with sicker workers or raising rates when someone is sick.

  15. Six Ways Health Reform Will Help Small Businesses (4) Increases Health Care Security To Unlock Entrepreneurship • Current health care system locks workers with families or health problems into their current job because they can’t afford to lose their insurance coverage. • Health Care reform will eliminate this “job lock” and free up small businesses to attract the best workers and encourage entrepreneurs to strike out on their own.

  16. Six Ways Health Reform Will Help Small Businesses (5) Reduces The Hidden Tax on Small Business Employees With Health Insurance • Currently, the cost of treating the uninsured adds a “hidden tax” of over $1,000 to every health care premium. • Health reform will significantly reduce this tax by covering an additional 32 million Americans by 2019.

  17. Six Ways Health Reform Will Help Small Businesses (6) Reduces Premium In The Small Group Market • In a recent survey, nearly 75% of small businesses that did not offer benefits cited high premiums as the reason. • Health reform will lower costs making coverage more affordable.

  18. Presented by: Christopher E. Hoyme HoymeC@jacksonlewis.com 10050 Regency Circle, Suite 400 Omaha, Nebraska 68114 (402) 391-1991 (402) 827-4232 Direct www.jacksonlewis.com

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