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With groups such as small businesses, the insurer has determined a premium price based on risk factors balanced over the entire group, using general information on members of the group, such as age or gender.
Small businesses often pay more for employee health benefits because they don't have the buying power of big employers. On average, small businesses paid about eight to 18 percent more than large firms for the same health insurance policy.
Health coverage providers may charge different premiums to small employers based on the industry of the employer or on the employer’s prior health claims. As both workers and small employers feel the financial squeeze, fewer are able to afford to offer, or purchase, health insurance coverage.
States most often review or approve policies that are offered directly to consumers or to small employers. Most states have had laws that require state-licensed health insuring organizations to provide coverage to small employers that want it, with some limitation on the rates that can be charged
Beginning in 2014, small businesses are able to participate in small business health options programs or SHOP exchanges.
These programs include new state-based health insurance purchasing pools or CO-OPs (in about one-half of the states) where small businesses are able to pool together to buy insurance.
Small businesses are defined as those that have no more than 100 employees. States have the option of limiting pools to companies with 50 or fewer employees through 2016. Companies that are currently defined as small businesses and grow beyond the size limit will be "grandfathered in" and treated like those still within the 100 or 50 maximum.
Small Business Health Care Tax Credit for Small Employers: The law also assists small businesses and small tax-exempt organizations afford the cost of covering their employees’ health insurance.
If a small business has fewer than 25 employees and provides health insurance it may qualify for a small business tax credit of up to 35 percent (up to 25 percent for non-profits) to offset the cost of insurance, starting with the 2010 federal tax year.
This will make the cost of providing insurance significantly lower. Starting in 2014, the small business tax credit goes up to 50 percent (up to 35 percent for non-profits) for qualifying businesses.
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