Law Offers Small Businesses Relief from Big Insurance Costs

Businesses with fewer than 25 workers were targeted for tax relief under the new health law because they face higher insurance costs than large businesses, and they are less likely to provide their workers with insurance.

There are many reasons that insurance is so expensive for small businesses. They often must pay broker fees, and administrative and medical costs can't be spread as broadly over small groups as they can be over large groups. Small businesses can easily pay about 20 percent more for coverage than large businesses.

As a result, fewer small businesses provide health insurance to workers. Only about half of companies with fewer than 10 workers offered insurance in 2008. That same year, nearly all firms with more than 100 workers offered some sort of health insurance.