Here’s a riddle for you. What did the small business owner do when she opened the letter from her health insurer?
If it’s Lynn Petrazzuolo we’re talking about, she did the happy dance. Because in that envelope was a $1428 rebate check from her health insurance carrier, who was reimbursing Lynn because it had failed to spend her premium dollars the way the new federal healthcare law requires.
Under the Medical Loss Ratio (MLR) provision of the Affordable Care Act, insurance companies must spend at least 80 percent of small groups’ premium expenses on patient care and quality improvement. That limits what they’re allowed to spend on administrative costs, marketing and profits to 20 percent of premium dollars. If carriers exceed that cap, they must reimburse their customers for the difference.
As the year progresses, small business owners are becoming increasingly iconic in Washington. In the latest round of legislative battles over whether to eliminate tax breaks for high-income earners, the small business voice is unscrupulously being leveraged to push a partisan agenda — an agenda that assumes small business owners are high-income earners. But there’s a problem. For the most part, they’re not. And the real voices of small business owners are fighting to be heard.
The argument for extending the tax cuts for earners with income exceeding $250,000 annually for the sake of small business survival is erroneous and misguided. The vast majority of small business owners simply don’t make that much money. According to the nonpartisan Tax Policy Center, less than 2 percent of small businesses are in the top two income brackets — individuals earning more than about $170,000 a year and families earning more than about $210,000 a year. We wish these hardworking entrepreneurs were rolling in $250,000 a year, but they aren’t.