1. What the Affordable Care Act Means
for Illinois Small Businesses
Mary Timmel
Outreach Manager
Small Business Majority
November 2012
1

2. JOYCE HARANT
Small Business Project Director
CAMPAIGN FOR BETTER HEALTH CARE
HOWARD LEE
WireHead Technology/ SBHCC Steering
Committee Member

3. About Small Business Majority
• Small business advocacy organization – founded
and run by small business owners
• National – offices in Washington, DC, Virginia,
Ohio, Colorado, Missouri, New York and
California
• Research and advocacy on issues of top
importance to small businesses (<100
employees) and the self-employed, including
healthcare, access to credit and clean energy
• Very focused on outreach to and education of
small business owners across the country

4. Small businesses struggling with
costs
" Soaring cost of health insurance – especially for
small businesses – 25% of small business owners
are uninsured (2012 Kaiser study)
" 28% self-employed: not covered
" Small firms pay 18% more than large businesses
Our national study: Small business health costs
would more than double by 2018 to $2.4 trillion
without healthcare reform

5. Small businesses struggling with
costs
Our most recent opinion survey: Small employers who don’t offer
coverage say lack of affordability is the biggest reason (70%)
Which one or two of the following best describes the reasons you do not provide health
benefits?
My business cannot afford it 70%
My employees get coverage elsewhere 32%
I do not believe it is the responsibility of my
business to provide health insurance 16%
Waiting to see what happens with the federal
health care reform law 9%
Too much paperwork and administration 5%
Choosing the right insurance plan is too
complicated 2%
0% 20% 40% 60% 80%

6. Small businesses struggling with
costs
Another opinion survey of ours found: 72% of
those who do offer say they are struggling to do so
My business is really struggling to
72%
afford the cost of health coverage.
(Asked of those who do provide
coverage) 28%
0% 20% 40% 60% 80%

7. The new federal law
• Builds on our existing healthcare system
• Aims to rein in healthcare costs; reduces deficit by
over $100B by 2020; by $1.3T by 2030
(Congressional Budget Office)
• Upheld by the U.S. Supreme Court on June 28,
2012
• Implementation is primarily the responsibility of the
states – essential to have small business input
• Important immediate benefits – other key provisions
to be implemented over the next 4 years

8. Immediate consumer protections
• Insurers will no longer be able to deny
coverage for patients with pre-existing
conditions (2010 for kids, 2014 for
adults)
• As of April 2012, 2,875 previously uninsured
residents of Illinois with pre-existing condition
now have access to healthcare through the ACA
PCIP program.
• Ban on lifetime caps that set lifetime
limits on coverage (Sept. 23, 2010)
• Adult children under 26 can stay on their
parents’ plan (Sept. 23, 2010)
• As of December 2011, 3.1M nationwide and
125,000 young adults in Illinois have benefitted
from this provision.

9. Immediate consumer protections
• Bans health plans from dropping coverage when someone
gets sick, if either the employee or their employer made an
unintentional mistake on their paperwork (Sept. 23, 2010)
• First-dollar coverage for preventive care for all new plans
(Sept. 23, 2010)
• 54M Americans nationwide, including more than 2.3 M in Illinois, with
private insurance now have preventative service with no cost-sharing.
• Increased access to care -- community health centers
(2011)
• Increased support for the 42 health centers in Illinois operating 522
sites, providing health care services to over 1M people. Health Center
grantees in Illinois have received $147,264,910.

10. Key provisions small businesses
should know about
• Provides immediate tax credit for most small
businesses
• Provides immediate access to a Preexisting
Condition Insurance Plan for individuals and the self-
employed
• Establishes a
competitive marketplace
for small businesses and
the self-employed

11. Small business tax credits
• Available to businesses with employees
• Available now (took effect tax year 2010)
• Which businesses are eligible?
þ Fewer than 25 full-time employees
þ Average annual wages <$50,000
þ Employer pays at least 50% of the premium
cost

12. Small business tax credits
Our report: 159,900 Illinois small businesses are
eligible (78.5% of all IL businesses); 48,400
businesses eligible for the maximum credit
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13. Small business tax credits
• More than 2 in 5 small business owners who
qualify for the credit are eligible for the maximum
• 19.3 million employees work for businesses that
can benefit from this credit
• Total value of the credit for tax year 2011: $15.4B
¡ An average of $800 in savings per employee

14. Small business tax credits
• Tax credits on a sliding scale:
o Up to 35% of premium expenses for 2010–13
o Up to 50% of premium expenses for any two
years beginning 2014 (purchase through
exchange)
• Tax credits do not cover premium expenses of
owners or their families
• Tax credits can not be claimed by the self-employed
• Still as an amendment to your 2010 taxes, or can
be carried back as far back as tax year 2010

15. How to claim the small business
tax credit
• Small employers (businesses or tax-exempt) will
use new Form 8941, available on www.irs.gov
• Small businesses will include the amount of the
credit as part of the general business credit on their
income tax returns
• The credit can be reflected in
determining estimated tax
payments for a year
• The credit applies towards
income tax, not employment
tax

16. Preexisting Condition Insurance
Plan (formerly high-risk pools)
• Available to individuals -- incl. self-employed
• Takes effect immediately
• Eligibility: Individuals who have been uninsured for six
months and have been denied coverage for a preexisting
condition or have a letter from a physician stating they
have a preexisting condition.
• Plans = lower premiums due to federal funding ($5B
over 5 years)
• Available until full implementation in 2014 (no gap in
coverage)
– www.PCIP.gov

17. Workplace wellness
• Grants to study small employer wellness programs
¡ $9M granted in 2011
¡ Reduce the risk of chronic disease among employees
and their families through evidence-based workplace
health interventions and promising practices.
¡ Promote sustainable and replicable workplace health
activities.
¡ Promote peer-to-peer healthy business mentoring.

18. Medical Loss Ratio: “80/20 rule”
• Requires insurers to spend at least 80% of small groups’ premium
expenses on medical claims and quality improvement.
• Limits administrative and profit costs to 20% of premiums collected.
• If carriers exceed this, they must make up for it by giving back rebates
for the difference.
• An estimated $1.1B will be given back in 2012 (HHS)
• Nationally:
¡ Average rebate per enrollee in a small group plan: $76
¡ Total rebates: $377M in the small group market, 28% of all small
employer plans
• Illinois:
¡ Total rebates: $61M, an average of $380 for the 163,000 families in
Illinois covered by a policy.

19. Rate review
• Insurance companies are required to publicly disclose
and justify rate increases of 10% or more. (Sept. 1,
2011)
• Insurers’ justification explanations will be posted on
HealthCare.gov and each state’s rate review program will
give customers a chance to comment on the explanations.
• A state can approve or reject an unreasonable or
excessive rate increase, if it has its own rate review law.
• If a state does not have a rate review program, or has a
rate review program that is ineffective, the federal
government will conduct rate reviews in that state.

20. State health insurance exchanges:
coming in 2014
• Large online marketplace to shop for health coverage
o Purchasing pool to increase buying power and reduce
administrative costs
o Small businesses with fewer than 50-100 workers eligible
• Private insurance plans will compete
o Improved competition will increase employer choice
o Exchange can negotiate with insurers on behalf of small
businesses to ensure higher quality and lower costs
• RAND Study
o Exchanges will expand coverage to 85.9% of small business
employees, up from 60.4% today, an increase of 10.5
million workers

21. State health insurance exchange
• One-stop shop web portal o Compare plans and get
detailed information
about price, quality and
Small Business Exchange service
INSURANCE PLANS o Plans organized by
category: bronze, silver,
EXCHANGE gold, platinum
Choice
Comparison o Calculator to compare
Billing
Tax Credits costs across plan
options
SMALL BUSINESSES o Streamlined billing
process

22. State insurance exchange
• Many small business workers and self-employed
entrepreneurs will receive affordability tax credits
towards their premiums
o Up to 400% of federal poverty level (approx. $90,000
for a family of four)
• Ensure that more $$ go to medical care – reduced
administrative costs
• Other incentives for administrative efficiency and
modernization
• Expanded coverage and individual responsibility
requirement – reduce hidden tax

23. State insurance exchange
• States determine whether to keep the individual and
small group markets separate or merge them
• Insurance will still be sold outside exchange
• Members of Congress must use the exchange

24. Exchange – key issues
• Active vs. passive (can the exchange negotiate?)
• Transparent design/full-disclosure on plans, costs
• Expanding exchange to large firms in 2017
• Incorporation of wellness and prevention programs
• Regional exchanges
• Role of brokers
• Administrative issues:
billing, payment, web, etc.
• Effective education and outreach

25. Shared & individual responsibility
• Businesses with fewer than 50 full-time workers – 96% of
all businesses – are exempt from any requirement to offer
insurance.

26. Guiding Principles for Establishing an
Illinois Competitive Marketplace for
Small Businesses
Accessible
• Insurance plans must have a range of costs to ensure
affordability.
• Includeprovisions to help small businesses and their
employees understand how to enroll, compare plans,
and obtain personal assistance, as through a toll free
hotline.
• Iseasy for small businesses, employees and providers
to use and reduces paperwork

27. Guiding Principles for Establishing an
Illinois Competitive Marketplace for
Small Businesses
Quality
• Must be a choice of several plans with different
benefit levels.
• Small business must be represented on the
Illinois Marketplace Governing Board, along with
a diverse mix of expertise related to health care.
• The Governing Board must be independent
• Ensure
ethnic, racial and cultural diversity in the
membership Governing Board.

28. Guiding Principles for Establishing an
Illinois Competitive Marketplace for
Small Businesses
Contains Costs
• Must have the same rules for plans inside and
outside of the competitive marketplace to ensure
that risk sharing is fair for all.
• Governing Board and all procedures must be
created to protect against Conflicts of Interest
• Transparency and consumer interests are fully
integrated into the insurance marketplace, such as
with a Small Business and Consumer Advisory
Committee to the Governing Board.

29. The Voice of Small Business is
Needed
To Enact a Health Care Marketplace (Insurance
Exchange)
* Governing Board
*Cost Containment and Fairness
+Rate Review
+ Active Negotiation with insurers
*Financing/ Sustainability

30. Resources
• Small Business Health Care
Consortium- A project of the
Campaign for Better Health Care
*Join
today & for more information:
www.cbhconline.org/smallbusiness/
You can help ensure small business
friendly legislation & regulations in IL
• Contact: Joyce Harant, Small
Business Project Director
* 309-648-3035
* jharant@cbhconline.org

31. What is the Small Business
Health Care Consortium?
A new tax exempt non partisan coalition of
small businesses.
Educate about the impact of health reform.
Enable a collective voice to foster needs of
small business and not the insurance
industry.

32. Why it is Important to
Participate in the SBHCC?
Improve small business access to
affordable insurance that will help to
attain and retain top talent.
Have access to timely information
about legislative changes & impact
decision making.

33. Why it is Important to
Participate in the SBHCC?
Ensure that employer of 50-100
employees can use the exchange in
2014
Ensure ability of state to negotiate
insurance rates

34. What does this all mean for your
bottom line?
Changes in average employer contribution per person covered

35. Resources
• National HHS website: www.healthcare.gov
• Our website: www.smallbusinessmajority.org
o “What’s in Healthcare
Reform for Small
Businesses”
o Detailed FAQ
o Tax credit calculator

36. Join our network
Contact
• Emma Hollister, Network Coordinator
• Email: ehollister@smallbusinessmajority.org
• Direct: (202) 828-8357
Ways to get involved:
Connect with us! • Receive a monthly newsletter
@SmlBizMajority • Share your story for media requests
• Letters to the editor/Op-eds
Small Business Majority • State events/Roundtables
• Fly-ins
• Webinars for business organizations

37. Illinois
Mary Timmel
Midwest Outreach Manager
Small Business Majority
mtimmel@smallbusinessmajority.org
(314) 605-1645