Limited participation in health exchange

Small businesses cite restrictive rules, walk away empty-handed

Relatively few local small businesses chose to sign up for health insurance through the health exchange since October because of restrictive requirements.

Forty local businesses sought assistance from the Southwest Small Business Development Center, but only about 10 signed up for it, said small-business health options coordinator Sue McWilliams.

Across Colorado, 220 small businesses enrolled in plans through the marketplace, providing coverage to 1,860 lives, according to data released by the state last week.

Colorado set up a health exchange called Connect for Health under the Affordable Care Act, often called Obamacare. Many other states didn’t set up an exchange.

While the open enrollment period for individuals closed March 31 for individuals, it is still open for small businesses to change their insurance.

But the tax incentives written to help small businesses limited insurance choices for employees. This is one of the reasons some businesses walked away locally, McWilliams said.

If small-business owners offer health insurance their employees can not seek individual insurance through new state-run exchange or Medicaid, McWilliams said.

Those who are self-employed and don’t have employees, must seek health insurance through the marketplace setup for individuals.

The health care changes were set up with a stick-and-carrot system with tax penalties for large businesses that didn’t offer insurance and tax credits for small businesses that signed up to offer their employees insurance through the state health exchange, said Jeff Bontrager a researcher with the Colorado Health Institute. Although the penalties have been delayed for a year to two years depending on the size of the larger companies.

Some small businesses qualify for tax credits equal to 50 percent of what they are contributing to their employees’ insurance premiums.

But the tax credits are restricted by a company’s number of employees, the salary of the employees and tax structure.

For example:

Businesses with between 49 to 26 full-time employees don’t qualify for tax credits.

If employees make more than $50,000 a year, they don’t qualify.

If business owners do not file their taxes for their business separately from their personal taxes they can’t qualify.

Business owners who are self-employed must seek health insurance through the marketplace setup for individuals.

“I would certainly think and hope there will be revisions made so it is a benefit for more employers,” said McWilliams.

Another one of the barriers for small businesses was limited choice, said Tim Hebert, president of Northern Colorado Association of Health Underwriters.

Many policies in the state exchange do not offer plans with the health saving accounts which help limit health insurance costs for small businesses’ costs, he said.

One of the wider impact of the health reforms across the board is higher health care costs for the middle class in general, Hebert said.

“Access has increased, what’s covered on the plans has increased, but the cost has gone up,” he said.