How Will Health Care Reform Affect Your Business, and Are You Prepared?
Big changes are in store for many small businesses because of the Affordable Care Act. Many important parts of the Act will be phased in starting in January 2014. According to Healthcare.gov, different provisions may apply based on the size of your business, including potential tax benefits and penalties for noncompliance.
Here are key points:
Open enrollment in the Health Insurance Marketplace began Oct. 1, 2013. The Marketplace offers a way for people without insurance to receive coverage and to find out whether they can get lower costs for private insurance. They can also find out whether they qualify for Medicaid or the Children’s Health Insurance Program (CHIP).
Coverage is scheduled to begin as soon as Jan. 1, 2014. Open enrollment ends March 31, 2014.
Healthcare.gov states that any health care plan purchased by a small business will need to include many basic services starting in 2014. Several requirements will depend on the size of your business, according to the Small Business Administration. These include:
- Self-employed. Individuals will be required to have basic health insurance coverage, make a “shared responsibility payment” when filing their federal income tax return or qualify for an exemption. Exemptions include hardship, religious beliefs or inability to afford coverage.
- Business with up to 50 employees. If you have fewer than 50 full-time employees, you don’t have to provide health insurance. However, you are required to educate your employees about health insurance exchanges and the implications of participating in them.
- Business with 50+ employees. If you have 50 or more full-time employees, you may face an assessment known as Employer Shared Responsibility if your company doesn’t provide affordable health insurance. These assessments are slated to go into effect in 2015.
The U.S. Department of Labor website has more information for employers in its Affordable Care Act section. The federal government has set aside $200 million to help businesses with fewer than 100 employees implement work site wellness programs to help improve employee health. Learn more about that on the Center for Healthcare Research & Transformation website.
States have some control over certain provisions of the law, including options for working with the federal government to provide health care plans and operating state-run plans. The U.S. Department of Health and Human Services has set up a website with state-by-state fact sheets to help consumers stay updated about each state’s plans.
State coverage options
- State-based exchanges. In 2014, businesses with 50 or fewer full-time employees can purchase health plans through Small Business Health Options Program (SHOP) exchanges, according to the Labor Department. Beginning in 2016, SHOPs will be open to employers with up to 100 full-time employees.
- Alternatives to state-based exchanges. Employers may also find plans through private exchanges run by third parties, such as health insurers and professional employer organizations. Private exchanges typically allow employers to design and customize the benefits they want.
Businesses with fewer than 25 employees that pay average annual wages of less than $50,000 and provide health insurance may qualify for a tax credit of 35 percent to 50 percent of their contributions to insurance premiums. The Department of Health and Human Services has more details about tax credits for small businesses as well as state-specific information.
Fines and penalties
In 2015, businesses with 50 or more full-time employees may be required to pay at least $2,000 per worker for not providing affordable, qualifying health plans. The required payment excludes the first 30 workers, according to Healthcare.gov. The payment requirement applies when a business:
- Does not offer coverage and an employee qualifies for a tax credit or subsidy to help pay for an individual plan.
- Provides coverage that falls short of affordability regulations.
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