Small Employers Who Offer Health Care: Check Your Mailboxes

John Arensmeyer

John Arensmeyer

Originally featured in The Huffington Post:

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.

The deadline for insurers to send out rebates was Aug. 1, so small business owners should start looking for them. Insurance companies across the nation — including UnitedHealth, the most colossal of all U.S. insurance giants — owe Americans $1.1 billion, collectively, according to the Department of Health and Human Services. And based on an initial report by the Kaiser Family Foundation, 28 percent of small employers offering benefits in 42 states will see part of that money. Those aren’t bad odds.

For Lynn Petrazzuolo, who pays $73,000 annually for health insurance at her small business, the rebate was a welcome surprise. Lynn owns Avanti Corporation in Alexandria, Virginia, a 21-employee business providing earth protection services focused on tribal environmental regulations. Lynn pays 100 percent of employee premiums. But it was only recently that she was even able to start offering insurance.

During the first two years, coverage for Avanti employees was cost-prohibitive because two of their five full-timers had preexisting conditions that insurers wouldn’t cover at reasonable rates (a practice that will be banned in 2014 under the new law). In 2006, Lynn’s group was finally able to get their hands on an affordable plan after hiring new workers who happened to be healthier. But since then, rates have increased about 10 percent annually.

“Luckily, our increased revenues have offset the increased costs of our health insurance. If the company wasn’t doing as well as it is, I’d have to consider passing some of the cost to employees or raising the co-pay on the plan,” she said. “And the rebate of nearly $1500 that we got for our 2011 costs further offsets our expenses and makes me feel confident we can continue paying 100 percent of our employees’ premiums. It’s nice to know that insurance companies are being held accountable for keeping my insurance costs tied to actual healthcare expenses.”

And the MLR rule isn’t the only insurance-related provision of the Affordable Care Act that’s in the spotlight this week. Many women-owned businesses will also happy to know that as of Aug. 1, new or renewing health insurance plans must cover a host of preventive services for women at no out-of-pocket cost — such as annual well-woman exams, birth control and more.

Entrepreneurs likely support this measure, as Small Business Majority’s recent opinion polling found that nearly three-quarters of small business owners are in favor of the new law’s provision requiring that insurers charge women the same rates as men. And in fact, about the same percentage also support the MLR rule.

So, if you’re a hardworking small business owner who provides health insurance for your employees, or if you’re a female small business owner, you might want to read up on the benefits you could soon be receiving. This rebate map will show you if your insurer is issuing refunds in your state. Plus, HHS also has new information showing the percentage of premiums each insurer spent on patient care versus overhead in 2011, along with information on women’s preventive services kicking in.

As you can see, it’s a big week in healthcare reform for small business. And that’s something to be thankful for. Small businesses’ premium costs have spiraled so far out of control over the past decade that more and more of them are being robbed of their ability to afford coverage for deserving employees, or like Lynn, have to try repeatedly to even access it. It was time something was done to start bringing these entrepreneurs relief, and the Affordable Care Act is off to a pretty good start.

Pushing High-Income Tax Cut Under Small Business Guise: Not Good Fiscal Policy

John Arensmeyer

John Arensmeyer

Originally featured in The Huffington Post:

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.

That said, it’s not surprising they actually support ending the upper income tax cuts. Small Business Majority’s national opinion polling recently found small business owners broadly agree they’re at a disadvantage when it comes to taxes. The majority of them would like to see tax cuts for those with annual household income exceeding $250,000 eliminated.

In reality, many of the owners who would be affected by ending these cuts are wealthy individuals who have created partnerships or S corporations to lower their tax obligations. They may not even be small businesses, but just appear that way on paper to the IRS. These are not your average mom-and-pop shops.

On the other hand, most small businesses benefit from the middle class tax cuts also set to expire at year’s end. Senators voted to extend these cuts last week when they approved the Middle Class Tax Cut Act, and the House is expected to vote on the bill Wednesday. If we want to keep afloat an important life raft small businesses depend on, the House of Representatives should pass it. Main Street entrepreneurs need it to continue saving money and growing their businesses.

When real small-business owners sit down to pay their bills and plan for the future, they worry about boosting sales, meeting payroll, affording health insurance, reducing their energy costs and the pending loan application at the bank. Our focus should be on helping them take advantage of provisions in the Affordable Care Act or increasing their access to capital, which will do far more to help them create jobs and grow our economy than ill-advised tax breaks for the super rich.

While the House of Representatives has the chance to stimulate small business growth by keeping the middle class tax cuts in place, it needs to take it. If it doesn’t, small business owners and their potential customers will only be left with more fiscal uncertainty. Middle class Americans make up a huge customer base for Main Street firms. Putting more disposable income in their hands will help pump money into small business coffers.

Our polling has found time and time again that low customer confidence is either the biggest or one of the biggest problems facing small business owners. Increased consumer demand for small business owners’ goods and services would mean more cash in small business owners’ pockets — and that could be spent on expanding and hiring new workers.

For the sake of the economy, the House should approve the legislation passed by senators last week. Entrepreneurs need it. What they don’t need is to see their hopes for the future dashed in favor of keeping the rich, rich, and they especially don’t need lawmakers shamelessly channeling their political influence to make that happen.