Huntington Herald-Dispatch – A new report published last week suggests that the Affordable Care Act may be good for new business in the Mountain State. The report by the Robert Wood Johnson Foundation found that the number of self-employed people in West Virginia should rise by 6,000 after 2014. The reason? Better access to affordable health insurance. Read
In addition to the usual risks involved with starting a company, a major barrier people face in setting out on their own is the difficulty in obtaining health insurance in the individual market. Those who do start their own businesses are often able to do so because they have a spouse with employer-based health insurance.
In West Virginia, where over 80 percent of those under age 65 who have health insurance get it through their employer, leaving a job means leaving the guarantee of subsidized health coverage for the uncertainty of the individual health insurance marketplace. Economists and health policy experts agree that tying health insurance to employment results in people staying in jobs that they might otherwise leave, also known as “job lock.” Fear of being denied coverage due to pre-existing conditions, unable to afford the monthly premiums, and fear of going without health insurance may prevent a worker from choosing to become self-employed or start his or her own business, leaving many locked in jobs where their talent may be underutilized.
The ACA, however, will largely remove this barrier. One of the primary components of the ACA is the “Insurance Marketplace” where individuals and certain groups of people like employees of small businesses or part-time workers will be able to shop for comprehensive insurance plans at affordable, often subsidized, rates. The ACA includes a number of provisions designed to increase the accessibility and affordability of coverage, particularly for those with pre-existing conditions. Under the ACA, no one can be denied coverage due to current or past health status, nor can they be charged more because of it.
Perhaps most significantly for a potential entrepreneur, the ACA provides tax credits for those who purchase their insurance through the Marketplace to reduce monthly premium costs for individuals and families up to 400 percent of the federal poverty level ($94,200 for a family of four in 2013). These tax credits are advanceable, meaning they will lower the cost of the health insurance premium on the day coverage is purchased so that consumers won’t have to wait until filing taxes to receive a refund.
The report concluded that there would be an 11 percent increase in people nationwide becoming self-employed as a direct result of the healthcare overhaul. In West Virginia, it is estimated that there will be a jump of 13 percent. That means 6,000 more West Virginians starting their own businesses, generating economic activity, creating jobs and paying taxes.
Who knows, maybe one of these daring entrepreneurs will found the next big West Virginia company like Mylan, Go-Mart, Tudor’s, or Fiestaware, providing jobs for thousands and generating millions of dollars for the state.
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