Tattoo parlors, yoga studios, liquor shops and book stores fill University of Minnesota neighborhoods to the brim.
Along with the diverse services, each business is in a different situation with health care reform.
While simultaneously encouraging coverage of employees, President Barack Obama’s health care reform bill will likely spur the growth and creation of small businesses, experts say.
A tax credit for covering employees is the biggest direct effect to small businesses. The credit, which is effective immediately, will rebate 35 percent of insurance premium costs that business owners spend on their employees.
In 2014, that rebate rate will increase to 50 percent.
This four-year gap is a period to ride out the recession and cushions small businesses’ premiums until states reach the deadline for setting up individual health insurance exchanges, said Terry Gardiner, national policy director for Small Business Majority.
These will further facilitate health insurance programs for small businesses, as they offer a marketplace where businesses can basically buy in bulk, Gardiner said.
The tax credit program focuses on small, lower-wage businesses.
The rebate decreases for every employee exceeding the tenth, or when annual average wages top $25,000, according to the Internal Revenue Service.
The bigger the business is, the smaller the tax credit it receives.
The Congressional Budget Office estimated these credits would amount to $40 billion collectively saved by small businesses by 2019.
University of Minnesota students with jobs around the area present a unique situation.
Dinkytown Wine and Spirits co-owner Kate Amendt said it is simply more economically feasible for student workers there to get insurance through the University.
It’s required for students taking six or more concurrent credits at the University to be insured, either independently or through the institution.
Little is subject to change for corporate chains that have taken root around campus.
Most employees will continue to be insured through the corporation directly and not the local location.
Corepower Yoga manager Tory Schaefer said that at his store, yoga instructors are subcontracted out of other companies and thus carry their own personal insurance instead of obtaining it through their current workplace.
The same is true for the majority of tattoo parlors and piercing salons, said Alex Levine, owner of Axis Body Modification Studio in Stadium Village.
Artists are subcontracted and supply themselves with health insurance.
“[Health care through the store] doesn’t fit our business,” Levine said.
For Jim Cummings, owner of Cummings Books, not providing health care is a decision that required little deliberation.
“I’m such a small business here,” he said, adding that many employees are students already insured by the University.
Benefits vs. costs
While such big numbers may seem foreign to the small shops that fill campus, Gardiner advised each individual business to look beyond the numbers.
Some businesses may still simply not be able to afford covering employees, he said.
But for some, employers may see the benefit of happier employees sticking around longer as worth the cost, Gardiner said.
“[Businesses] will have to do their own math and figure it out,” he said.
The generally easier access to health care for small business employees may also spur entrepreneurship and startups — especially in coming years, which entail job searches for many current University students.
Until the reform, would-be entrepreneurs would shy away from taking risks because they wanted health care for themselves and their families, Gardiner said.
“A lot of people, they’ve got the experience and they’ve accumulated some savings and they want to go out on their own,” Gardiner said, “but they can’t get insurance, or maybe they can get insurance but it’s so expensive.”
Health care reform and subsequent broader availability may make these risks look less daunting, Gardiner said.
The broadening health coverage also helps small businesses to be more competitive in recruitment.
Previously, only big corporations could attract the expertise they needed with their health care packages. Smaller companies are more appealing now, said Carlson School of Management professor Harry Sapienza.
Smaller businesses may not otherwise have the resources to attract potential employees, he said.
UMN students have traveled to Florida colleges to collaborate with students on various projects.
When UMN students plan for a vacation, having trip cancellation travel insurance is a worthwhile commodity to check out.
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