The passing of the Affordable Care Act (otherwise known as Obamacare) ushered in an era of all Americans being put in charge of their own health insurance. Those without insurance are now required to purchase it, and some are eligible for help from the government. The real question for small businesses is how does Obamacare affect us? For small and medium-sized businesses, the following facts may be important to you.1. 50 Employees or More
The mandate to offer insurance to your employees and their dependents doesn’t kick in if you have less than 50 full-time-equivalent (FTE) employees. Starting in 2016, once you hit the threshold of 50 FTE, you are required by law to either offer health insurance to all full time employees - or pay a tax penalty.
2. Not for Seasonal Employees
If you hire extra employees for seasonal work, you are not required to offer health insurance unless you are over 50 FTE employees for 120 days or more.
3. Combining Ownership
To get around the law, many companies split into two entities with fewer than 50 employees. In most cases, this will not get a company out of the requirement to offer health insurance coverage, as the ACA and tax law treats related companies as one (referred to as a controlled group).
4. ACA Regulations Apply to Group Plans
Even if your company offers an alternative group health plan to employees - such as a healthcare reimbursement plan - you still need to be in compliance with the ACA.
5. Coverage is Required for Full-Time
If you do have more than 50 FTE employees, your business must provide coverage for 95 percent of employees considered “full-time” by the ACA.
6. Minimum Coverage
The ACA sets a minimum coverage requirement for businesses with over 50 FTE employees that must provide insurance to their employees, preventing businesses from offering a bare-bones plan to skirt the law.
7. Affordability Requirements
As your business offers health insurance, these plans must meet the guidelines of “affordability” set by the ACA. According to the law, any individual employee can’t be required to pay in excess of 9.5 percent of annual household income for health insurance.
8. Additional Returns
The IRS requires small businesses to report information on the insurance coverage they offer to their employees. Additional information is available here.
9. Self-Employed Deduction
The ACA maintains the self-employees health insurance deduction, although how it works and how it will change in the future is still unclear.
10. Other Insurance Options
As health care becomes a necessity and many employers are forced to offer coverage, other businesses are turning to other insurance options (such as a qualified small employer HRA) for incentives to keep talent with their company.
These facts will help you navigate the ins and outs of health coverage for small businesses. If group health insurance isn't a good fit for your company, there are alternatives that may prove helpful for your small business.
What has Obamacare meant for your small business?