Health Law Consulting Blog

Friday, September 27, 2013

How the Patient Protection & Affordable Care Act May Impact Your Small Business

The Patient Protection and Affordable Care Act (ACA) will provide several benefits and opportunities for small businesses to increase access to affordable health care coverage options.  The parts of the ACA that most directly affect small businesses are:  (1) the new state insurance exchanges; (2) tax credits; and (3) the employer mandate. The insurance exchanges and tax credits will take effect as planned on January 1, 2014. The employer mandate will be put off for an additional year until 2015.

Read on to learn more about the parts of the ACA that directly affects businesses.

New State Insurance Exchanges
Under the ACA, new state insurance exchanges will provide health insurance coverage options to eligible individuals and small businesses. All businesses will be required to provide employees with notices advising them of the existence of a statewide health insurance marketplace. This mandate applies to all employers engaged in interstate commerce or with at least $500,000 of sales per year.  The notice must provide employees with information necessary to make informed decisions about their health insurance.

Note, many companies already offer and want to continue to give their workers health care coverage. One of the purposes of the ACA is to encourage businesses to continue this practice.  The Gallaway Safety & Supply company has done just that.

Owners of the Gallaway company distributed information pertaining to the ACA to their employees recently. The company currently has 22 employees.  All of the employees indicated that they wanted to stay with Gallaway Safety & Supply’s insurance coverage. Owner Colin Gallaway believes that offering health insurance coverage to his employees makes sense for his company, or any other for that matter.  Colin stated that “for our full-time employees, we offer a health care package along with retirement, days off, what any good business should offer.  We think it’s a good way to retain employees.” 

The state health care marketplaces are scheduled to open on January 1, 2014.  Open enrollment for health care coverage under state exchanges will begin on October 1, 2013. In addition, employers will be required to provide their employees with adequate notice regarding their options of obtaining health care coverage through the state exchange.

Premium Subsidies Are Available to Certain Businesses
Certain small businesses may be eligible for substantial tax benefits for providing workers with healthcare coverage.  For example, companies with fewer than 26 employees that meet certain criteria can take partial tax credits if they buy worker health insurance through a state-based insurance exchange. Businesses with 10 or fewer employees can take advantage of full tax credits.  These credits -- designed to help employers offset their cost of providing employee healthcare coverage -- will also take effect on January 1, 2014, as planned.

Penalties for Not Providing Coverage: The “Employer Mandate”
Under the employer mandate provision of the ACA, businesses with at least 50 full-time workers will be subject to penalties if they do not provide these employees with healthcare coverage. A business will have to pay $2,000 for every non-covered full-time employee.  The first 30 employees will be excluded from the penalty assessment.   

In addition to providing coverage, business owners will have to provide health coverage reports and certain health insurance information to the IRS.  In particular, employers will be required to report whether or not it offers minimum essential health benefits under its health plan and its share of the total cost of benefits under its health plan(s) for full-time employees. These reporting requirements have been delayed until 2015 in addition to the other employer mandate provisions.

Connect with me for more information on how the ACA will impact your small business.


Small businesses stand pat on health care coverage as Affordable Care Act readies for rollout

Compilation of Patient Protection and the Affordable Care Act

The Affordable Care Act Saves Money and Gives Small Business Owners More Affordable Insurances Choices

October 1st Deadline Approaching: Employers Must Provide Notice to Employees of Health Insurance Exchange Options


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