Love it or hate it, Obamacare (the Affordable Care Act) is the law of the land.
If you have less than 50 full-time employees, no problem – you don’t have to provide health insurance (but, if you own two or more businesses with a combined total of more than 50 employees, you do – all of your employees are counted together). 30 hours a week is considered full-time. If you have 50 or more employees working 30 hours per week, or its equivalent (for example, 150 part-timers working 10 hours per week) you will be penalized if you don’t offer “affordable” health insurance that meets certain standards. “Affordable” is defined as premiums for the individual employee that are 9.5% or less of the employee’s annual household (included spousal) income.
Health Insurance Exchanges
Businesses with generally fewer than 100 employees can shop in a Health Insurance Exchange, which are intended to give small businesses buying power similar to large businesses. Open enrollment begins on October 1, 2013. Every state will have a Health Insurance Exchange by January, 2014. If a state chooses not to create an Exchange, the federal government will set up an Exchange in the state, leaving the state with an option to transition to a state Exchange if they decide do so after 2014. Locally, Maryland and DC have received approval for their State Insurance Exchanges; Virginia has not submitted a plan. Click here to see if your state has an approved Health Insurance Exchange and for more general information about how the Exchanges work.
The Act assesses companies with 50 or more employees that do not offer health insurance a penalty of $2,000 per employee (excluding the first 30 employees). Companies that do offer insurance, however, may also be subject to penalties if they have employees who qualify for tax credits in the Health Insurance Exchanges. Employees can qualify for a credit if their personal contribution to their premium is deemed “unaffordable.” If any of a company’s workers enrolls in a plan through an Exchange and qualifies for a subsidy, the company will face a penalty. The penalty will be the lesser of $3,000 per employee receiving a subsidy or $2,000 for each of the company’s full-time employees, again exempting the first 30 employees.
Special Tax Breaks
Some small businesses that aren’t required to provide coverage, but do so anyway, may be eligible for special tax credits. Small businesses with no more than 25 employees and with average annual wages of less than $50,000 may receive a credit for up to 35% of what they contribute towards employee premiums. (This small business health insurance tax credit has been available since shortly after the health reform law was signed in 2010.) Beginning in 2014, the tax credit increases to a maximum of 50% of the amount small businesses contribute towards employees’ monthly premiums.
There have been dire warnings that the Affordable Care Act would cause small business owners to sell their businesses and run for the hills. While the provisions of the Act that affect business owners most directly don’t take effect until 2014, business brokers and mergers and acquisitions specialists report that they have not seen anything that looks like a panic sell-off. Yet.
Retrieved from: http://www.primeinvestments.us/blog/bid/294092/How-Obamacare-Will-Affect-Small-Businesses-in-2014?goback=.gde_2304376_member_245421493
MAAPPS Legislative Committee