LEGAL & REGULATORY • August 19, 2015
2 minutes Read
By Gene Marks
The Affordable Care Act (or ACA or Obamacare) is law. It’s been through numerous election cycles and two Supreme Court rulings. Sure, things could change as a result of the 2016 elections. But for now, if you run a business, you must deal with this as a fact. And here are five important things you need to know about it.
1. Everyone must have health insurance. That’s the individual mandate. That went into effect on January 1, 2014. Starting that year, we are all required to attest on our individual tax returns that we have health insurance. If we don’t, then we are subject to a fine. That fine will ultimately be $695 or 2.5% of our adjusted gross incomes in 2018. As an employer, you should do your best to make sure your employees are aware of this law.
2. You may be required to provide affordable healthcare to your employees. If you have more than 50 full-time equivalent employees as of January 1, 2016 (or 100 as of January 1, 2015) you’re required to provide affordable healthcare insurance to your full-time workers. There is a separate definition of full time equivalent and full time employees. There is a very specific definition of “affordable.” There is a calculation you must perform every year. If you don’t provide affordable health insurance then you may be subject to a fine of $2,000-$3,000 per employee. You need to work with your advisors on this.
3. Certain coverages are now required by law. Insurance companies are now required to provide certain coverages by law. For example, your employees with pre-existing conditions can now change policies, certain preventative care is now paid for and dependents up to the age of 26 can get insurance on their parents’ plans. You will have the choices of different health plans (i.e. bronze, silver, gold) but these plans are essentially different, not because of their coverages, but because of their deductible and out of pocket expenses. Talk to an advisor about which plans are right for you.
4. There is a tax credit. If your business employs less than 25 people and you pay an average salary of $50,000 per year, and you buy insurance from a SHOP exchange (see below) you may be eligible for a tax credit for up to 50% of the cost of the insurance you buy. Talk to your advisor. If you haven’t taken this credit before then amend your tax returns and carry it back.
5. The exchanges are working. Yes, there were blips when the exchanges first went online. But Healthcare.gov is now fully functional and working well. You can (or will soon be able to, depending on the size of your company) purchase health insurance on the SHOP (Small Business Health Options Program). The SHOP exchanges are currently struggling but are expected to grow. My prediction is that they will be the main place most small companies buy their health insurance within the next few years.
Yes, the ACA is here to stay. At least for the foreseeable future. As a business owner your job is to plan ahead and make decisions that will affect your company and its employees. Most of my clients are not dropping healthcare because of the ACA. But they are making changes. So should you.
Small business influencer Gene Marks is a guest blogger for CAN Capital. He is a celebrated author, columnist and small business owner.
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