Workers in small firms that do not provide health insurance constitute a large block of the uninsured. How to bring them (and their dependents) into coverage is a major policy issue. Begining in 2010, federal tax credits are available for small, low-wage firms to offset up to 35% of the employers' health insurance contributions. But these credits alone are highly unlikely to bring uninsured small-firm workers into coverage.
The Institute has worked on hybrid coverage initiatives to leverage subsidies from various sources (existing tax subsidies, new tax credits, existing public program funds, modest contributions from previously non-offering employers, etc.) to make affordable work-based coverage available to workers in such small firms. Such initiatives could also help build rather than undermine the sense if individual and mutual responsibilities essential to effective implementation of full reforms in 2014.
This strategy could also seed early implementation of small-employer Exchanges, which could coordinate subsidies for working uninsured and their families with private employer dollars, providing a streamlined source of coverage and eligibility determination, enrollment, and plan payment.
Such Exchanges can further benefit small employers by efficiently providing employee choice of health plan, and consumer advocacy and empowerment that is otherwise generally unavailable in the market.
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IHPS provides technical assistance to States and localities interested in expanding coverage for low-income small-firm workers and their families in small firms, and in early development of small-employer Exchanges.
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Small-Employer ('SHOP') Exchange Issues in California (IHPS,March 2011)
Use of Subsidies to Low-Income People for Coverage through Small Employers (Health Affairs, May 2003)
Coverage of Uninsured Workers in Small Firms: The Significance of Self-Employment among Firm Owners (IHPS, April 2003)