by Matthew Valeta, Health Policy Fellow
Employer sponsored health insurance originated in the United States during World War II. Most employees’ wages were frozen as part of the war effort but employers still needed a way to attract workers to their business. One way to do this was to offer benefits people wanted. And there you go – the modern health insurance system was born.
Today, the employer sponsored health insurance model is the main source of coverage in the United States. 56% of all Americans are insured through their employer; 58% of all Coloradans.
However, it has been harder for Colorado’s smaller businesses to continue to offer their employee’s health insurance because of growing costs. In order to expand access to 30 million new Americans, Obamacare has several tools to help incentivize smaller employers to offer health care to their employees.
For example, it is estimated in 2014, 96% of all Colorado employers will be able to purchase health insurance though Colorado’s new Health Benefit Exchange (COHBE), which is being supported Obamacare. The COHBE will be a marketplace for consumers and employers, where they will be able to shop for and compare health insurance plans. In fact, Colorado is creating a whole portal in the COHBE specifically for employers. The Small Employer Health Options Program (SHOP) is currently being designed for employers up to 49 full time employees. In 2016 the SHOP will expand to businesses with up to 100 employees.
One of the most exciting things about the SHOP is that employers will be able to qualify for tax credits for purchasing their insurance. In Colorado, as many as 82,000 small businesses and non-profits may be able to qualify for the tax credit. Employers with 25 or fewer full time employees, average employee wages of less than $50,000, contribute at least 50% of their employees’ premiums, and purchase through the SHOP can qualify for up to a 50% tax credit. The tax credit is on top of your normal deduction for health care. Non-profits who meet the same qualifications are eligible for up to a 35% tax credit.
Check out our fact sheet What the Affordable Care Act means for Colorado Employers for information on how health care reform impacts employers of different sizes.
There are a lot of resources out there for employers who want to know if they can benefit from Obamacare. Check them out here:
• Fill out the Credit for Small Employer Health Insurance tax form to claim your tax credit.
• Use Small Business Majority’s tax credit calculator see if your business is eligible for tax credits.
• Learn more about Colorado’s Health Benefit Exchange at getcoveredco.org.
• Find health insurance for your employees at finder.healthcare.gov
• Find out more at www.cohealthinitiative.org and www.smallbusinessmajoirty.org.