Health Care, Law, and Small Business & Startups

Is your small business ready for Obamacare?

March 29, 2013
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Is your small business ready for Obamacare?
The Affordable Care Act, or Obamacare, defined President Obama's first term. Photo via fb.com

Here’s a brief summary of Obamacare to expand your level of awareness — aimed at encouraging you to seek out additional resources.

President Obama signed the Affordable Care Act, or Obamacare, on March 23, 2010.

The law puts in place comprehensive health insurance reforms that will roll out over four years and beyond. The health care reforms are designed to ensure Americans have access to quality, affordable health insurance.

Obamacare includes a variety of measures specifically for small businesses that help lower premium cost growth and increase access to health insurance.

Depending on whether you're self-employed, an employer with fewer than 25 employees, an employer with fewer than 50 employees or an employer with 50 or more employees, different provisions of Obamacare may apply to you. 

The implementation of Obamacare occurs in stages, with many of the reforms and requirements taking effect in 2013 and 2014.

Self-employed individual

The individual shared-responsibility provisions of Obamacare call for each self-employed individual to have basic health insurance coverage, known as minimum essential coverage.

The self-employed will qualify for an exemption or make a shared-responsibility payment when filing a federal income tax return.

Fewer than 25 employees

The small business Health Care Tax Credit will help you afford the cost of health care coverage for your employees.

This tax credit is specifically targeted for businesses with low- and moderate-income workers.

The credit is designed to encourage small employers to offer health insurance coverage for the first time — or maintain coverage they already have. 

50 or fewer employees

These businesses will have access to the new health care insurance marketplaces through the Small Business Health Options Program (SHOP).

Currently, small businesses may pay on average 18 percent more than big businesses for health insurance, because of administrative costs.

SHOP will offer small businesses increased purchasing power to obtain a better choice of high-quality coverage at a lower cost.

50 or more full-time/full-time equivalent employees

These businesses that do not offer affordable health insurance that provides minimum value to their full-time employees, and dependents, may be required to pay an assessment if at least one of their full-time employees is certified to receive a premium tax credit in an individual health insurance marketplace.

A full-time employee is one who is employed an average of at least 30 hours per week.

The assessment, known as Employer Shared Responsibility, will offset part of the cost of the marketplace tax credits.

If a business meets the threshold level of 50 full-time or full-time equivalent employees, or is close to it, it’s important to understand how these rules may apply and how the payment amounts could be calculated.

The implementation of Obamacare will start rolling out this fall and will continue to roll out for years to come. 

There are several resources available for business owners to start understanding the Affordable Health Care Act. Two resources to get you started are sba.gov/healthcare and healthcare.gov.

As a business owner, do you know what your health care obligations are going to be in 2014?

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