Small Business Guide to the Affordable Care Act

healthcare-govFirst and foremost, this is not a commentary on the Affordable Care Act (“ACA”).  I am not going to offer my opinion or anyone else’s.   The purpose of this article is to offer information to small business owners on how ACA effects them by clearing up some questions and offering resources for further information.

Small Business Guide to the Affordable Care Act

As a business owner in California,

Do I have to provide health insurance for my employees under ACA?

Not if you have fewer than 50 employees.

Does ACA help get insurance for me as a business owner?

Yes.  Covered California allows you a way to purchase health insurance for you and your family in a relatively easy fashion with pre-tax dollars.

How does ACA help me provide health insurance to my employees?

By shopping for health insurance through Covered California, employees get rates comparable to a large firm group rate.   As an employer you can create an account on ACA called Small Business Health Option Program (“SHOP”)* and choose what plans to offer your employees.   Employees can select one of those plans and have their premiums taken out of their checks before income tax is calculated (pre-tax).  As an employer, you receive only one bill even if you are identifying plans from several different carriers.

Tax Credit

If you have fewer than 25 employees, the average annual salary for full-time employees is less than  $50,000 and you pay at least 50% of the employee’s (not his/her family’s) premium, you may be eligible for a tax credit.  Check with your accountant to get more information.

Pre-Tax Dollars

When you sign up for insurance through SHOP, premiums are pre-tax.  Therefore, your employee saves on taxes and you save on taxes since their taxable income is reduced.

What am I required to do under ACA?

As a small business owner, you are required to tell your employees about ACA.  There are two notices that meet the requirements of this rule.  Choose which notice is appropriate for your company.  Links to them are:

Notice for employers who do not offer health insurance

http://www.dol.gov/ebsa/pdf/FLSAwithoutplans.pdf

Notice for employers who do offer health insurance.

http://www.dol.gov/ebsa/pdf/FLSAwithplans.pdf

Who regulates the ACA?

The Department of Health and Human Services regulates the ACA.  In California, Covered California is the place where Californian’s purchase health care when there isn’t a health plan provided by his/her employer or as a small business owner looking to provide coverage for employees.

What is the definition of Affordable Health Care?

If employees contribute to their employer-sponsored insurance premium, and if their contribution for self-only coverage (not family members) is less than 9.5% of their annual household income, the coverage is affordable under the ACA.

*SHOP on-line has been taken down for improvements and will be up and running again in the Fall of 2014.  There are instructions and forms for enrolling via paper.

References and Resources for more information

Small Business Administration

Covered California

Department of Health and Human Services

Mcclanahan, Carolyn, September 9, 2013, www.forbes.com, retrieved from http://www.forbes.com/sites/carolynmcclanahan/2013/09/14/why-every-small-employer-should-sign-up-for-obamacares-shop-exchange/

http://www.sba.gov/content/employers-with-fewer-25-employees

~ Diane L. Camacho, CLM, SPHR, Owner, DLC Consulting Services, www.dlcconsultingsrvs.com, Email Diane.

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