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Obamacare’s Impact On Small Business

A short summary of the key aspects of ObamaCare and the impact they will have on small businesses.

Obamacare’s Impact On Small Business

To The Point

The Affordable Care Act does not require businesses with fewer than 50 full-time employees to provide their employees with healthcare coverage. If an employer has fewer than 25 employees and chooses to provide insurance anyway, the Affordable Care Act provides a tax credit to help offset the cost. (In order to receive the credit, the employer must purchase health insurance through the health insurance exchange, plus meet other requirements.)

Employees of businesses with fewer than 50 employees that do not provide health insurance will be eligible to purchase their own coverage through the health insurance exchanges that will be established under the Affordable Care Act in 2014.

The Affordable Care Act & Small Business

  • The Affordable Care Act creates the Small Business Health Options Program or SHOP, a part of each State’s Health Insurance Marketplace, where small businesses with under 50 full-time equivalent employees can purcahse group health coverage starting October 1st, 2013. In 2016, those with 100 full-time employees or less can use the SHOP.
  • Taxes and tax credits are based off of the number of full-time equivalent employees (FTE) and their average annual wages, not solely on the number of full-time employees.
  • Small businesses with fewer than 25 full-time equivalent employees with average annual wages below $50,000 can get tax credits (as adjusted for inflation beginning in 2014) to help pay for employee premiums.
  • Tax credits are retroactive back to 2010. This means businesses can still claim their health insurance tax credit from 2010 to the present.
  • Small businesses with more than 100 full-time equivalent employees with average annual wages above $250,000 must provide health coverage to full time employees come 2015. This is also known as the “the employer mandate”.
  • Beginning in 2016, businesses with 50-99 full-time equivalent employees will have to insure their full-time workforce as well.
  • Starting in 2015 any business who is supposed to insure its full-time workers but does not will have to make a $2,000 shared responsibility payment on their year end federal income taxes. The fee is $3,000 if the employee gets health insurance subsidies through the marketplace. Get the details on the employer mandate.
  • Businesses making over $250,000 in profit must pay a .9% increase on the current Medicare part A tax. The tax is split (.45% each) between the employer and employees making over $200,000 individual ($250,000 family).
  • All businesses with over 50 full-time equivalent employees have to let their employees know about their State’s Health Insurance Marketplace / exchange. What Do I Need to Tell My Employees about ObamaCare?

So What Does This Mean To Me & My Employees?

Beginning 2014, businesses will have new options when shopping for health insurance. The SHOP provides an online marketplace to browse and purchase health insurance. If your company is covered by the Fair Labor Standards Act, you must provide a written notice to employees informing them:

  • About the the Health Insurance Marketplace,
  • They may be able to get lower costs on private insurance in the Marketplace based on their income, depending on any coverage you offer,
  • If they buy insurance through the Marketplace, they may lose the employer contribution (if any) to their health benefits, and
  • If they opt to purchase insurance through the Marketplace instead of taking their employer coverage, and the employer coverage is deemed ‘affordable’ under the Affordable Care Act, they will not be eligible to receive any premium subsidies.

This notice must be provided to all employees regardless of whether they are full-time or part-time employees or whether or not they’re enrolled in your health care plan.

The ACA does not mandate where small businesses purchase coverage. Business owners can purchase coverage from the new exchange, or just as you do today. We can can help you decide which plans will fit the needs of you and your employees the most.

Affordable Care Act Overview and Guide

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Learn More About The Affordable Care Act (ACA). Call us today to receive more information about Obamacare and how the law will impact your small business. We are here to help every step of the way.

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