WASHINGTON, DC - APRIL 05: Former President Barack Obama (L) and U.S. President Joe Biden shake . [+] hands during an event to mark the 2010 passage of the Affordable Care Act in the East Room of the White House on April 05, 2022 in Washington, DC. (Photo by Chip Somodevilla/Getty Images)
On March 23, 2010, President Barack Obama signed the Patient Protection and Affordable Care Act, often called the Affordable Care Act (ACA) into law. This has since expanded healthcare coverage to tens of millions of Americans, including small business owners, their employees, and their families.
A record 21.3 million Americans currently have healthcare coverage because of the ACA Health Insurance Marketplace. The additional options entrepreneurs have today that were not available 14 years ago are benefitting them in numerous ways. Here are five.
1. Freedom to Pursue Entrepreneurship
Prior to the ACA, worry over losing healthcare coverage from an employer was a barrier for people who wanted to start their own business. Now, if you have a great idea and want to pursue your dream of opening a small business, you no longer have to worry about where to get your health insurance. Individuals can now go on to HealthCare.gov or their state-based Marketplace to find an affordable plan that allows them to start their own business while knowing they will be covered, with no exceptions for pre-existing conditions or lifetime limits on their coverage.
2. Diverse Coverage Options
While there is more work to do to give small employers choice in the market, there are more plans available for small business owners to obtain coverage and offer it to their employees. The Small Business Health Options Program (SHOP), provides options for small employers who want to offer coverage to their employees. In addition, the program also offers calculators on full-time equivalent employees, the Small Business Health Care Tax Credit, and the minimum participation rate to determine if they are eligible for SHOP.
3. Talent Recruitment
As with getting their own healthcare coverage, small business owners often faced challenges in providing affordable health care coverage to their employees, and thus had difficulty competing with larger businesses in recruiting talent. The ACA leveled the playing field by offering options to make small business and startups more competitive, with the ability to offer healthcare benefits to employees through the Health Insurance Marketplace.
MORE FROM FORBES ADVISOR“Small business owners and self-employed individuals constitute a substantial portion of Marketplace enrollment among working-age adults, accounting for 25 percent of enrollees,” said Walt Rowen, president of Susquehanna Glass in Columbia, PA, and co-chair of Small Business for America’s Future in written testimony for the House Committee on Ways and Means Subcommittee on Health last year. “Moreover, the implementation of the ACA has led to a remarkable decrease in the uninsured rate among self-employed adults aged 21-64.”
4. More Subsidies to Offset Health Insurance Premium Costs
The American Rescue Plan expanded the ACA tax credits that reduce monthly premium expenses, making health coverage on the ACA Marketplace more affordable to millions of Americans, and the Inflation Reduction Act extended them through 2025, which may help employees of small businesses who are in the Marketplace. The Centers for Medicare & Medicaid Services estimates that four in five HealthCare.gov customers were able to find health care coverage for $10 or less per month for the plan year of 2024 after subsidies, thanks to the Inflation Reduction Act.
5. No “Family Glitch”
In 2022, President Biden issued an Executive Order strengthening the ACA by fixing the so-called “family glitch” loophole. Under the ACA, people qualify for a premium tax credit to purchase affordable, high-quality coverage through HealthCare.gov or their state’s marketplace if they do not have access to “affordable” health insurance. Prior to this order, employer-based health insurance was defined as “affordable” if it met that criteria for an individual plan covering the employee, but the same requirement was not in place for coverage for additional family members, making them ineligible for the tax credit. The federal rule change fixing this “family glitch” for coverage starting in 2023 means that more family members of employees who get insurance through their employer are eligible for financial assistance in buying insurance through the ACA marketplaces.
The last three years have seen the launch of an unprecedented number of new small businesses. While there are many reasons for this growth, one can speculate that the freedom and safety offered by the ACA may have been of them.