Small businesses will be one of the biggest groups affected by the Affordable Care Act and business owner still have a lot of questions about the new law. Time is running out for answers to these questions as enrollment in state health care exchanges is set to start on Oct. 1, 2013 for coverage beginning Jan. 1, 2014.
Some of the common concerns for employers are: Do they need to offer coverage to their employees? Where can they purchase coverage? What are the benefits included? Will there be penalties involved if they don’t provide coverage? And there are plenty more.
Here are five things small businesses should know about the Obama administration’s landmark law.
The small business health options program will not be available until 2015
Small business health options program or SHOP is a major provision of the Affordable Care Act. The program will allow small businesses to purchase insurance directly on the health insurance exchanges without going through a broker.
Unfortunately the federal government decided to delay the implementation of the program until 2015. It was originally scheduled to go live with the rest of the law on Jan. 1, 2014.
With the new SHOP exchange, employers will be able choose the level of coverage they want to offer - bronze, silver, gold, or platinum plans. They can also set how much they would contribute to the cost of the insurance (with 50% as the minimum).
This delay will make it more difficult for small businesses to continue to offer health insurance. Some people think that the complexity and added cost of providing health insurance coverage will make life more difficult for employers, so the delay might cause major consequences.
No penalties for businesses with fewer than 50 employees
Under the new law, businesses with fewer than 50 full time employees will not be forced to offer health insurance. This could be good news for local shops who are concerned about the added burden of offering coverage to their workers.
However, businesses with more than 50 full time employees must offer health benefits coverage or pay a penalty of $2,000 per year for each full-time employee in excess of 30 full-time employees.
In addition, large employers cannot offer just any type of plan either. The health benefits coverage they offer must be affordable and comply with the minimum health benefits set by the law or pay $3,000 per year for each full-time employee receiving federal financial assistance. The penalty cannot exceed what the business would pay if it did not offer health care coverage.
Your number of full time employees depends on hours worked
The new law defines full-time work as averaging only 30 hours per week. This will affect businesses who employ part-time workers to avoid complying with the rule that requires businesses with 50 or more workers to provide coverage or pay a penalty.
So if you have two employees who work 15 hours each per week, they will be considered as one full-time employee under the new law.
Here an example on how to determine your total number of employees according to the website Small Business Majority:
Example: For the 2010 tax year, an employer pays 5 employees wages for 2,080 hours each, 3 employees wages for 1,040 hours each, and 1 employee wages for 2,300 hours.
The employer’s FTEs would be calculated as follows:
1) Total hours (not exceeding 2,080 per employee) is the sum of:
a. 10,400 hours for the 5 employees paid for 2,080 hours each (5 X 2,080)
b. 3,120 hours for the 3 employees paid for 1,040 hours each (3 X 1,040)
c. 2,080 hours for the 1 employee paid for 2,300 hours (hours limited to 2,080)
Total: 15,600 hours
2) FTEs: 7 (15,600 divided by 2,080) = 7.5, rounded down to the next-lowest whole number).
Credit: http://www.smallbusinessmajority.org/hc-reform-faq/#1a
Tax credits are available for businesses with fewer than 25 employees who offer health insurance
Businesses with fewer than 25 full-time employees and average annual salaries of less than $50,000 may receive tax credits of up to 35 percent of the employer’s contribution if they provide health coverage to their workers. Next year, the credits may increase to a maximum of 50 percent of the employer’s contribution to premiums.
Under the new law, small businesses with fewer than 50 employees have two options: they can provide group plans available through the exchanges (or someplace else), or they can let their workers buy their own coverage through the exchanges. They can decide whether to contribute to coverage that their employees purchase.
The tax credits and subsidies provided by the Affordable Care Act will help individuals and families pay their premiums according to their income level. Some businesses with fewer than 50 employees can also choose to save their workers money by directing them to the individual exchanges instead.
Alternative medical treatments are offered under the affordable care act
The Affordable Care Act recognizes complementary and alternative medicine such as acupuncture, chiropractic care, massage therapy, and naturopathy. These treatments are covered under the new law as long as the provider is licensed by the state.
This article was contributed by Michael Cahill, Editor of the
Vista Health Solutions blog. Michael has a degree in Journalism from SUNY New Paltz. Previously he worked as a reporter for the Poughkeepsie Journal and as an editor for the Rockland County Times.
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