Health Care Reform and Small Businesses

Kelley-Jensen2Author:  Kelley Filice Jensen

How does health care reform affect small businesses?  What classifies a business as small?  Does reform help or hurt small business owners?  There is a lot of confusion about this new law and the impact it will have on small businesses and owners of those businesses.  Maybe the business has never provided health insurance benefits to employees, but would like to and would like to know more about the state exchanges set up for small business owners.  Or maybe, the business owner has no legal obligation to provide insurance for his employees, even under the new law, but would like to help his employees enroll in affordable health insurance plans available with health care reform.  Questions and answers for small businesses are right here.

What is the first thing that businesses need to know about health care reform?

Effective January 1, 2015, employers with 50 or more full-time employees will be subject to a penalty if they fail to offer their employees affordable health insurance coverage that meets the law’s minimum essential coverage requirements.

Is there a government plan that small businesses can enroll in?

No.  Health care reform does not provide government sponsored health plans, for individuals or small businesses.  It does provide subsidies and tax credits through state or federal exchanges like Covered California.

What is Covered California?  Covered CA  is a State-based marketplace created by Health Care Reform to help people buy private insurance plans with subsidy.

Does Covered California serve businesses?  Covered CA can serve small businesses, those with 50 or fewer full time employees, with a specific program called the Small Business Health Options Program (SHOP).

If I am interested in learning about the SHOP, can an agent help me?  Yes, insurance agents that have been certified by Covered California are able to enroll their clients through Covered California.

What is the cost difference to my business if I use an agent or go directly through the exchange?

None.  Agents are paid by the insurance carriers, not businesses.

What are the advantages of SHOP?  SHOP can offer affordable choices, predictive costs and simple administration.

What are the disadvantages of SHOP?  There may be better plans, equally affordable, outside the SHOP.  To fully evaluate your options as a small business owner, it is best to utilize the services of an agent that represents multiple insurance carriers and is certified by Covered California.

I have heard that there are tax credits available to businesses that provide health care coverage?  Businesses with 25 or fewer employees are eligible for a tax credit for employees with an average annual salary of less than $50,000.  Consult your tax advisor for calculation of the credit if you think it may apply to your business.

I have less than 50 full time employees, is it true that I am not required to provide health insurance for my employees?  That is true, the new health care law, the Affordable Care Act (ACA) does not require employers with fewer than 50 full time equivalent employees to provide health insurance for their employees.

What if I have over 50 full time employees but still do not want to cover my employees?  The ACA does not require you as an employer to provide health insurance for employees.  Starting in 2015,  it assesses a penalty for not providing it, but does not make it illegal.

What will the penalty be for non-compliance with the ACA employer mandate?  The penalty, sometimes referred to as the “play or pay” penalty is $2,000 for each full-time employee, over a 30-employee threshold, calculated and paid on a monthly basis.


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