By Kolonji Murray
In the past, one of the major barriers to starting a business for many people had to do with access to affordable healthcare. The recent implementation of the Affordable Care Act or Obamacare, has changed that. Now business owners can access healthcare that is affordable.
Higher Monthly Premiums in the Past
Prior to the implementation of the Affordable Care Act, monthly health insurance premiums ranged from $300-$2,000. And to make matters worse, each year saw increases in the amount of premiums owners had to pay. This caused many existing policy holders to simply drop any sort of health insurance coverage. Also, in many cases, those premiums kept young entrepreneurs from even considering starting a business.
Help With Advanced Premium Tax Credits
For starters, the Act has introduced advanced premium tax credits which help pay a portion of the monthly insurance premium. Those eligible for the credit make between 138% and 400% of the poverty level.
The credits works like this for owners:
Assume the normal monthly health insurance premium is $435 per month with a particular insurance company. Now let’s assume that the monthly advanced premium tax credit the individual qualifies for is $234 per month. The owner is responsible for paying out of pocket the remaining $201 per month.
The only downside to the credits occurs if the owner makes much more then what they originally estimated on the application. The credits may be taken back on their future tax return. But in this case, the owner would be able to make more of the payments themselves because of the increased income.
The key would be to make sure the insurance company was contacted once they started making more money. The insurer can then adjust the monthly premium accordingly.
Help Through Medicaid Expansion
Many more owners may qualify for the expanded Medicaid program under the Affordable Care Act. Under this plan, they would pay little to nothing per month in premiums and little to no co-pays for doctors and dental visits. Those that qualify for this program make less than 138% of the poverty level.
Again, if the owner does make much more than expected, then they would need to notify Medicaid about their increased income so an adjustment to their monthly premium can be made. Otherwise, they too would face a penalty that would be taken out of their future tax return.
So how is this all possible? The Affordable Care Act was established so that people of all income levels could have access to affordable healthcare. Therefore, when an individual puts their estimated future income in the application process, the premium that they would ultimately pay would be based on that income.
So for those that in the past might have considered starting a business but were concerned about health insurance and their related cost, new options are available – options that are attractive enough for entrepreneurs to go out and follow their dreams.
About the Author, Kolonji Murray
TaxAssurances, LLC is an independent financial services firm that provides expert advice and solutions in three financial disciplines: Accounting, Insurance and Investment Management. It’s Founder, Kolonji Murray, has worked as a banker, accountant and financial advisor for a number of leading firms. He holds a degree in Accounting from Hampton University and is active in a number of civic and industry organizations. Along with being an Accountant, Mr. Murray holds Series 7 and 66 licenses in the state of New York. He is also licensed to provide life, accident and health, variable life/variable annuities insurance.