The Affordable Care Act, otherwise known as ACA or Obamacare, has had many business owners trying to figure out how it will affect their organization and their current ability to offer health insurance to employees. It is paramount that they understand everything that ACA means to small businesses.
Mandate/Penalty Delay
Originally, the penalty for not offering health insurance to employees should have been in effect as of 2014 but was put off to 2015/2016. Under this rule, a business having more than 50 full-time employees must provide health insurance that covers at least 95% of employees and any dependents until they turn 26.
If they do not offer health insurance coverage to employees by a certain time, employers are required to pay a fixed charge based on the number of full-time employees after the first 30 employees. For example, if your business employs 60 people and you do not offer health insurance, your firm will incur a $2,000 fee for each employee after the 30th employee and $3,000 for employees who should receive cost assistance. To avoid this penalty, some small businesses are implementing other options such as offering their employees a group insurance plan or a reimbursement plan for their health insurance.
Specifics of the Employer Mandate
Under the employer mandate, the following numbers apply:
- Organizations with over 100 FTEs (full-time equivalents) must provide insurance for 70% of FTEs by 2015 and 95% by 2016.
- Organizations with between 50 – 99 FTEs must provide insurance by 2016.
- Organizations with 49 FTEs or less do not have to offer insurance.
The employer not only must offer coverage but also offer minimum value coverage as outlined by the ACA. If coverage is not enough or is unaffordable for staff, employers will also pay an Employer Shared Responsibility Payment every month per employee.
What’s an Affordable Plan?
An affordable plan is listed as costing not more than 9.5% of the household income for coverage for just the employee, which many businesses comply with to avoid fines.
In conclusion, employers will need to determine if it’s less expensive to pay the fine for not having coverage or to offer coverage that is affordable for the employees. If you need to discuss this with a professional in this arena to determine your best option, contact us for a referral to someone we trust.
Image courtesy of freedigitalphotos.net/Sira Anamwong
