Controlling the cost and improving the quality of health care
On average, small businesses pay about 18 percent more than large firms for the same health insurance policy, and small businesses lack the purchasing power of larger employers. The health care law includes many cost-saving provisions to increase small business health insurance purchasing power while improving the quality of health care.
encouraging safety and promoting efficiency
Many parts of the health care law change the way the government pays health care providers. These changes encourage safety, such as penalizing hospitals for high rates of infection, and promote efficiency, such as providing incentives for better coordination among doctors and hospitals. These changes will improve quality and lower overall costs within the system, which can positively affect your bottom line. Find out more here.
Improved cost measures
Small Business Health Care Tax Credits Are Available
Tax credits are available to smaller employers with fewer than 25 full-time employees with annual average wages less than $50,000 and pay for at least half of employee health coverage premiums. Find out more.
The Creation of an Affordable Insurance Marketplace
Small businesses are now able to purchase health coverage from Covered California – an insurance marketplace that gives small businesses the same purchasing power as large employers and offers an option for side-by-side plan comparisons. Find out more.
Improved Standards Measures
Medical Loss Ratio Reform
Insurers are required to spend at least 85 percent of insurance premium dollars for large group plans and 80 percent for small employer and individual plans on direct health care expenses and quality improvements – instead of salaries, overhead or administrative expenses – or provide a rebate to customers.
Rate Increases Must Be Justified by Insurers
Insurance companies are required to disclose and justify large premium increases, and these increases can be publicly deemed unreasonable by the state insurance commissioner.
Improved Coverage Availability Measures
Rights to Getting and Keeping Small Employer Coverage
Health insurance companies cannot turn down small employers with 2-50 employees based on the health status of employees or their family members, and they must sell to any small employer the same types of health plans they sell to other small employers in California.
Health Status Is Protected From Rate Fluctuations
Insurers are no longer allowed to charge more based on the health status of the group or the gender of employees. There are also limits on how much premiums can vary based on age.
Protecting Current Plans Through “Grandfathering”
Small businesses that wish to keep the insurance plan that they had in place before the enactment of the health care law may do so through the process of grandfathering. “Grandfathered” group plans are subject to fewer requirements under the health care law. For example, grandfathered plans are not required to:
Cover preventive services without cost-sharing.
Cover essential health benefits.
Provide for an internal and external appeals process for contesting coverage decisions.
Allow direct access to an OB/GYN without a referral.
Businesses wishing to keep their grandfathered plans may change insurance carriers and keep grandfathered status if the benefits and costs to employees stay largely the same. Grandfathered plans may keep this status as long as they do not make significant changes to coverage, such as increasing cost-sharing or cutting benefits.
It is important to note that health carriers are not required to continue to support their grandfathered plans, they are just not required to terminate them.