Affordable Care Act may ease health care costs for Virginia business owners

Feb 07, 2013
Affordable Care Act may ease health care costs for Virginia business owners

Despite all the wailing and hollering in Congress, the Affordable Care Act, a pillar of President Obama’s presidency, has not yet closed down any small businesses. In fact, most business owners are still trying to figure out how the new legislation, which is designed to provide health insurance for 33 million uninsured Americans, will work.

Right now, many states are busy establishing the ‘exchanges’ where business owners and individuals can access more insurance options starting this fall.

“We’ve had two panel discussions to provide information,” said Lesley Bruno, spokesperson for the Greater Richmond Chamber. “Everyone is very eager to learn how it might impact their businesses in the Richmond area.”

So far, the state of Virginia was due to receive about $20 million from the federal government to set up the state’s new insurance exchange. However, Virginia is one of 25 states that will rely on the federally run exchange. Gov. Bob McDonnell said in December that Virginia will not create its own. Whether federal- or state-run, the online exchange will offer a variety of health plan options to compare, similar to a travel site like

In 2012, the U.S. Health and Human Services Department estimated Virginians saved about $34 million on premiums, rebates and discounted prescriptions. The law also requires that insurance companies spend between 80 and 85 percent of premiums on providing actual medical care, not on advertising or administration.

Nationwide more than $1.1 billion has been refunded to consumers by insurers, according to HHS.

No matter where you stand politically, most Americans would agree that something had to be done to reduce health care spending. U.S. health care insurance premiums have increased an average of 10 percent a year since 1985, according to industry analysts. Thirty-three million Americans still have no health insurance – relying instead on expensive emergency room visits eventually paid for by taxpayers. And in the past, when you lost your job or changed jobs and switched insurance carriers, you and your family members were at risk for being denied coverage due to pre-existing medical conditions.

Not so anymore. The law prevents coverage from being denied on various fronts, as well as allows children, up to the age of 26, to be covered by their parents’ insurance plans.

“It’s going to be good for small businesses,” said Fritz Tavarez, community relations manager for Health First, a nonprofit group that provides insurance for low-income New Yorkers.

Tavarez was among the 80 business owners and advisors who attended a recent workshop on the Affordable Care Act and how it works, sponsored by the Greater New York Chamber of Commerce.

In addition to expanding access and adding more options for companies wanting to provide insurance benefits for employees, Congress sweetened the deal by adding tax credits which are around 35 per cent this year, but will increase to 50 percent in 2014.

At this point, companies with fewer than 50 employees are exempt from having to provide insurance. Companies will more than 50 employees have to provide coverage or pay penalties.

But even very small companies should consider offering insurance as a retention strategy, according to Mark Jaffe, the New York chamber’s insurance expert. During his presentation, he said a hypothetical small business owner who pays $40,000 a year to cover seven employees would save $14,000 in taxes.

Business owners attending the session in New York this week said they appreciated finding out more about how it works before the deadline approaches for taking action. You can learn more on and the U.S. Small Business Administration's Affordable Care Act web page. The SBA also provides a fact sheet for small businesses.



Jane Applegate
Jane Applegate is the author of four books on small business success, including 201 Great Ideas for Your Small Business, published by Bloomberg/Wiley in all formats. Her multimedia production company produces a variety of corporate-sponsored events. Visit for video profiles, interviews and advice from national experts.