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What Small Business Owner's Need To Know About Obamacare's Employer Mandate

What Small Business Owner's Need To Know About Obamacare's Employer Manadate
Most small business owner’s I speak to assume they will have to provide health insurance benefits for their employees beginning 2015. In addition, they feel the law will have a negative impact on small business. The fact is, ObamaCare should help most small businesses with tax credits and creating more options when shopping for health insurance. Below are some things small business owners need to be aware of before the “employer mandate” goes into effect.

The Magic Number

If you are a business who employs less than 50 “full-time equivalent employees”(FTE), which is generally an employee working 30 hours a week, the Affordable Care Act does not require that you provide your employees with health care coverage.

Obamacare uses the number of full-time equivalent employees to calculate whether or not a business will be subject to the employer mandate. Obamacare also has many ways of counting FTEs. One way is by adding the hours of part-time employees and equating that to a FTE employee. For example, 3 part-time employees each working 10 hours a week will be considered one FTE employee. Divide the hours of all part-time employees for the month by 120. This will give you the number of FTEs your part-time employees equal.

25 FTE or Less

If you have less than 25 FTE and provide health insurance benefits even though you are not required to, you may be eligible for a tax credit to help offset the cost of premiums. (In order to receive the credit, the employer must purchase health insurance through the state’s health insurance exchange). Also, these tax credits are retroactive back to 2010, which means businesses can still claim their health insurance tax credit from 2010 to the present.

Greater Than 50 FTE

Small businesses with 50-99 (FTE) will need to start providing insurance to employees by 2016. Businesses with a 100 or more employees will need to start providing health benefits to at least 70% of thier FTE by 2015 and 95% by 2016, or be hit with a per employee penalty.

What Do I Need To Tell My Employees about ObamaCare?

If your company is covered by the Fair Labor Standards Act, meaning you have annual sales greater than or equal to $500,000 or engage in interstate commerce, you must provide written notice to employees informing them 1)about the the Health Insurance Marketplace, and that 2)they may be able to get lower costs insurance in the Marketplace based on their income, depending on any coverage you offer. Employees also must be notified if 3)they buy insurance through the Marketplace, they may lose the employer contribution (if any) to their health benefits. Note: 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.

Do I Need To Purchase Coverage Through The “Marketplace”?

Obamacare does not mandate where small businesses purchase coverage. They are only concerned whether or not you are offing affordable health insurance. Therefore, business owners can purchase coverage from the state’s “business marketplace”, called SHOP (Small Business Health Options Program) or just as you do today by calling a broker. Using a broker is always advised as they will be able to help you determine which plan will best fit the needs of your company and your budget. Be to sure to ask if the broker is certified to sell exchange plans. If they are, they will be able to guide you through those plans as well.