2.3 million Hispanic entrepreneurs and Hispanic small businesses may benefit from the Patient Protection and Affordable Care Act
There are 5.5 million self-employed or small minority owned businesses in the United States; 2.3 million of these are Hispanic and they employ an additional 1.4 million people. Most Hispanic business owners are self-employed or considered small employers (less than 50 employees, according to the PPACA). These small businesses range from family-owned bodegas to solo professionals such as accountants and tax advisors to professionals with employees such as attorneys and doctors.
Obamacare Exemptions and Eligibility Rules
It is important to note, that small businesses employing 50 people or less are exempt from the mandatory Employer Responsibility Requirement and thus do not have to offer employees health insurance. If you currently do offer health insurance you should become familiar with an important provision of the law. Beginning in 2010, eligible small businesses that do provide healthcare coverage for their employees can claim a tax credit of up to 35 percent of the expense of covering their workers. In 2014 this credit increases to 50 percent. Important eligibility rules apply:
- Eligible businesses are those with 25 full-time equivalent employees or less with average annual wages of less than $50,000. To be eligible for a tax credit the employer must pay at least 50 percent of the total health insurance premium for the employee. Vision and dental care qualify for the tax credit too.
- Check with your tax advisor. If your business qualifies and you did not take the credit, you can file an amended tax return. The law is a bit complicated as different size businesses qualify for different credits. The maximum benefit is for businesses with less than 10 employees.
- Insurance companies that do not spend at least 80 percent of insurance premiums on health care for individual buyers and 85 percent if an employee pays part of premiums as well as employers who pay premiums are required to refund the difference beginning in 2012. According to Fox News individuals and small businesses will receive nearly $1.3 billion in refunds for 2012. This part of the PPACA, known as the Medical Loss Ratio Rule, is designed to prevent health insurance companies from over-charging insurance buyers to enhance profits or cover excessive administrative costs. Refunds may be issued beginning on Aug. 1, 2012.
Health Care Insurance and Solo and Small Business in the Future
In 2010 99 percent of large employers–those with 1,000 or more employees–offered health insurance. However, only 76 percent of employers of small groups comprised of 10 to 24 employees, offered health benefits that year and less than 60 percent of microbusinesses (those with three to 10 workers) offered health insurance.
The PPACA will help make it possible for solo self-employed and small and microbusinesses to get health coverage. Presently, small businesses are charged higher premiums because the risk of an employee getting sick is greater for a small business than in a large employer group. As a result small businesses pay on average 18 percent more in premiums according to the White House. Beginning in 2014, in addition to tax credits, employers and individuals will be able to go to state insurance exchanges, which will allow employers with up to 100 employees to go the insurance exchange called Small Business Health Options Program (SHOP). Here they join with other employers to form larger groups so that the risk is spread among larger groups. The Congressional Budget Office estimates that small businesses will see up to a 4 percent reduction in premiums. In 2017 states may allow employers with more than 100 employees to purchase through SHOP, further increasing group sizes and decreasing premiums.
The act also directs the Government Accounting Office (GAO) to review how well these exchanges function in making healthcare more affordable for small businesses to provide to their employees.
Why This Act is Important to Hispanics
The Hispanic community is underserved by health insurers when compared to the non-Hispanic white community, according to the Center for American Progress:
- 32 percent of Hispanics are uninsured, only 11.4 percent of non-Hispanic whites have no health insurance
- 68 percent of Hispanics have health insurance compared to 88 percent of white Americans
- Of those employed by a small business, 57 percent of those under age 64 have no health insurance while only 24 percent of white employees lack health insurance
- 35 percent of Hispanics under 64 report suffering from chronic health conditions
- Hispanic women are 12 percent less likely to undergo cancer screenings and develop cervical cancer at double the rate of non-Hispanic white women
- Hispanics have higher rates of end-stage renal disease caused by diabetes and are 50 percent more likely to have a death from diabetes than non-Hispanic whites.
- The PPACA offers the Hispanic business community a more affordable way to provide healthcare insurance to the self-employed and small business owners and their employees.
Take two is your opportunity to weigh in. What do you think of the PPACA? Does your Hispanic small business provide healthcare benefits for workers? How will Obamacare affect your business? Visit our Facebook page and add your Take Two.