Is your small business in the 96% or not? When the 2010 Affordable Care Act (ACA), or more popularly known as Obama Care, becomes enforced at the beginning of 2014 the question you will be asking yourself is if it affects your small business. According to a reference document written by US Small Business Administration called “What’s New with Size Standards,” a small business employs 50 or less full-time workers (working 30 or more hours per week). Also, if you own a “small business” you will not be subject to the mandate that says you must cover your employees’ health insurance. Yet, there are much more implications than just the mandate.Impact on small business
Businesses that employ 51-100 full-time workers are subject to paying for a major portion of each employee’s health insurance. Come 2014, an employer will have to pay 100% of all of their employee’s health insurance or pay the $750 fine. It may be cheaper to pay the fine, but at what cost of disenfranchising your employee? However, starting 2014, businesses with 51-100 employees can purchase health insurance through the health insurance exchange for small businesses called SHOP. The SHOP will allow employers to comparison shop for Qualified Health Plans (QHPs). SHOP and QHPs may be limited to smaller employment levels based on different state involvement in SHOP, but by 2017 they should be open to all and even employers of over 100 employees. The attempt of SHOP is said by the non-partisan Congressional Budget Office to reduce health insurance coverage by 1-4%.
Even if your small business employs 50 or less full-time workers it may still be subject to the Medicare tax hike. A company that makes $250,000 or more a year in profit will have to pay .9% increase in Medicare taxes. There are tax benefit upsides to the Affordable Care Act for small businesses too. If you are a more compassionate small business employer and provide health insurance you will be privy to a 50% (35% non-profit) tax benefit beginning in 2014. In order to come under compliance, over 50% of the health insurance policy must be covered.
Benefits of ACA
One of the great benefits of ACA is that it covers pre-existing conditions. This in consequence has short term implications from 2014-2016 of a $63 fee per employee on employers of more than 50, but by 2017 this fee will be phased out.
A major issue brewing about the implementation of the ACA is whether your company falls over or under 50 full-time employee threshold. This problem is called the 10% gap and the difficulty lies within the matter of an employee being full time or not. This sticking point may be the difference between expanding the business or restructuring it so as not to incur paying the health insurance resulting in expenditures of many thousands of dollars. Yet, all businesses must grow or sink.
The fact is that the ACA will soon be law and whether your small business adapts to it is up to you. In the end the intent is that we grow healthier as a nation and prosper to greater ends.
Berwick Insurance Group (Health Insurance Tucson), is a team of insurance professionals that can help guide you through the upcoming changes in health insurance law. Berwick Insurance Group represents many major insurance carriers and can find a program that is right for your needs.