Small Business

How does the Obamacare law affect small business health insurance?

Updated on November 30, 2019


Officially known as the Affordable Care Act, or the ACA, the Obamacare law affects small business owners in several ways.

  • It has, in many cases, driven down the costs of employer coverage by changing the way premiums are calculated
  • It can affect your taxes
  • It may require larger employers to offer coverage to workers

Let’s look at each of these in more detail:

First, under Obamacare your health insurance premiums are no longer based on the health or pre-existing medical conditions of the people in your group.

In the old days, sick coworkers could result in increased premiums for everyone else, but small business health plans are generally no longer underwritten in the same way.

Now, your costs are mostly based on the ages of your employees and the general health risks of people in your local community or region. This often results in lower premiums relative to self-purchased coverage.

Second, you could generally deduct monthly insurance premiums from your business’s taxes before Obamacare, but the Obamacare law also made special tax credits available to some businesses.

If you have fewer than 25 employees, ask your licensed agent about these credits when shopping for coverage.

Third, you should know that under Obamacare only businesses with fifty or more full-time workers (or the equivalent in part-time employees) are obliged to offer coverage or face a penalty.

That said, many small business owners still opt to sponsor an employer-based plan for themselves and their employees.

To learn more about your small business health insurance options today, visit

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