Since its approval by Congress on March 23, 2010, many provisions of the Affordable Care Act have already been phased into our health care system. To better inform Detroit citizens about this health care law and its implications, we will dissect a different component of the act in upcoming issues of Thrive Detroit.
Small businesses account for a significant share of both existing jobs and new hiring in the United States economy. Small businesses and start-ups have traditionally avoided the expense of employer-provided health insurance. On January 1, 2010, the Small Employer Tax Credit provision became law. This provision helps small businesses and small tax-exempt organizations provide health insurance coverage to their employees. Businesses with 25 or fewer employees qualify for a tax credit of up to 35% to offset the cost of an insurance plan. The credit will increase to 50% by 2014. Small nonprofit organizations with 25 or fewer employees can claim a 25% tax credit for the years 2010-2013 and a 35% tax credit in 2014.
Annual health insurance costs have increased dramatically since 2007. This increase in cost has hurt small business owners who want to offer a comprehensive benefits package to woo and retain new and quality employees. Due to financial constraints, many businesses have been forced to pass insurance premium increases onto their employees, if they kept the benefit at all.
The second provision to become law expands the parameters for who qualifies for Medicaid. As of April 1, 2010, the federal government has been offering states matching Medicaid funds to additional low-income individuals and families for whom federal funds were not previously available. This has made it easier for states that choose to do so to cover more of their residents.
A state and federal partnership, Medicaid provides coverage for people with lower incomes, older people, people with disabilities, and some families and children. Each state operates their own Medicaid program, and the federal government matches eligible costs.
With the first two provisions in place, the number of people with access to health insurance increased. Businesses with the capability of providing insurance now have greater incentive to make insurance available to all people.